EUROCHEM 2020 ANNUAL REPORT AND ACCOUNTS

RESILIENCE IN ACTION

2020 ANNUAL REPORT AND ACCOUNTS EuroChem is one of the world’s leading mineral fertilizer producers. We sell around 18 million tonnes of fertilizers a year, generate annual revenues RESILIENCE of some US$6 billion and employ over 27,000 people worldwide. IN ACTION As COVID-19 developed into a pandemic that caused unprecedented turbulence worldwide, EuroChem’s STRATEGIC REPORT 2020 Highlights 2 business model proved resilient, delivering record results Investment Case, Value Creation 4 and paving the way for continued growth. Framework Chairman’s Statement 6 CEO’s Q&A 8 SEE CHAIRMAN’S Focus Areas in Action: Safety 10 STATEMENT ON PAGES 6-7 Focus Areas in Action: Productivity 12 LEADING Focus Areas in Action: Growth 14 Business Model 16 SEE CEO’S Q&A ON PAGES 8-9 Strategy 18 PROGRESSING Global Presence 20 Stakeholders 22 SEE STAKEHOLDERS ON PAGES 22-23 Market Overview 24 ENGAGING Operational Review 28 Our Product Portfolio 50 SEE FINANCIAL REVIEW ON PAGES 54-57 Financial Review 54 DELIVERING Sustainability Review 58 Risk Management 82 SEE SUSTAINABILITY DRIVING REVIEW ON PAGES 58-81 GOVERNANCE REPORT Board of Directors 88 Corporate Governance 90 Audit Committee 98 Strategy Committee 100 Nomination, Remuneration and 102 Corporate Governance Committee

FINANCIAL STATEMENTS Independent Auditor’s Report 105 Consolidated Statement 110 of Financial Position Consolidated Statement 111 of Profit or Loss Consolidated Statement 112 of Comprehensive Income Consolidated Statement 113 of Cash Flows Consolidated Statement 114 of Changes in Equity Notes to the Consolidated 115 Financial Statements Strategic Report Corporate Governance Financial Statements

2020 HIGHLIGHTS

OUR PEOPLE Throughout the pandemic, we have In 2020, despite the challenges created by the pandemic, we delivered worked diligently to safeguard our people. We introduced all relevant sanitation, social record financial and operational results. We also expanded our activities distancing and personal hygiene measures, and in Latin America and started constructing a new ammonia and urea transitioned more than 6,000 office staff worldwide to working remotely. Despite these steps, many production facility in Russia. departments have tragically lost colleagues to the virus, and we express our deepest sorrow and FARMERS AND SUPPLIERS condolences to loved ones. We are proud of the Despite encountering certain essential role our people have played in inevitable distribution challenges, EuroChem’s COVID-19 community response, we have remained agile and found volunteering to provide support for the solutions to ensure that customers are SALES EBITDA elderly and disabled, as well as local served during these times. medical institutions. As governments recognise the fertilizer market as essential to global food US$6.2BN US$1.8BN security, we were able to continue working with farmers and 2020 2020 6.2 1.8 suppliers to help to keep food 2019 6.2 2019 1.5 Our response on tables worldwide. 2018 5.6 2018 1.5 to COVID-19 LOCAL COMMUNITIES As we continue to support the local OPERATING CASH FLOW EBITDA MARGIN communities surrounding our areas of As the pandemic took presence, we have worked closely with hold in March, we adopted municipal governments to provide targeted US$ BN % assistance based on the actual needs of a new crisis management 1.6 29 the population. This includes the provision model to support our INVESTORS 2020 1.6 2020 29% of medical supplies and personal In 2020, we ramped up protective equipment. stakeholders and mitigate our constructive collaboration 2019 2019 1.2 25% all associated risks. with the international investment 2018 1.0 2018 27% community, providing regular business updates on our COVID-19 response. In April, despite pandemic-related volatility in global finance, we re-entered the Russian debt capital GOVERNMENT markets with a new five-year RUB35 billion SALES VOLUMES POTASH OUTPUT The Group’s executive team has (US$470 million equivalent) bond placement. In May, been in constant contact with municipal S&P maintained the Group’s rating at ‘BB-’ with a and regional bodies where we operate, and ‘positive’ outlook, citing our ability to maintain 25.6MMT 2.2MMT has established a COVID-19 response strong results, notwithstanding the market headquarters to help to coordinate efforts. turbulence. In addition, Russia’s ACRA 2020 25.6 2020 2.2 It has held regular video conferences with rating agency issued a credit rating of government representatives to ensure that our ‘ruAA-’ for EuroChem. 2019 23.6 2019 1.1 assistance remains aimed at specific needs. 2018 22.0 2018 0.25 Our joint efforts have helped to reduce COVID-19 infection rates in our communities.

2020 KEY EVENTS

EXPANDING Estimated INCREASING NEW LEADERSHIP INVESTOR TRUST CAPACITY annual DISTRIBUTION In September, EuroChem attracted DELIVERING We approved the ammonia In August, we EuroChem announced new debt capital market construction of capacity completed the the appointment of funding on the back a state-of-the-art acquisition of 100% of its new CEO, Vladimir of solid business ammonia and urea 1.1MMT Fertilizantes Tocantins Rashevskiy, fundamentals, earning a production facility in Brazil, thereby further whose deep knowledge Cbonds industry award RECORD as part of the Estimated expanding our of the business will for best placement in the EuroChem annual distribution network in guide the Group sector. Northwest project urea capacity Latin America, a key through further growth. in Kingisepp, 1.4MMT growth region for the RESULTS Russia. business.

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INVESTMENT CASE VALUE CREATION FRAMEWORK

The combination of our scale, reach and control Our value creation framework sets out how our of the whole value chain gives us our competitive Mission and Vision for 2025 drive our strategic focus advantage, providing an ever-greater ability to meet on safety, productivity and growth from mine to farm, the needs of customers worldwide. all reinforced through our sustainability approach.

Cost-effective Vertical integration MISSION STRATEGIC APPROACH FOCUS AREAS We are one of just three companies with direct access Full vertical integration – from extracting raw materials At EuroChem, we Our strategic approach to value creation By maintaining a vigilant to raw materials in all three primary nutrient groups. to delivering final product to customers – gives us improve the quality ensures that we continuously improve the focus on three key areas, Our long-term gas supply contracts minimise our unrivalled control over the value chain, strengthening of life of the world’s most important aspects of our business. we can achieve our exposure to price volatility, and together with self- our position in every market. It also underpins one ever-increasing goals sustainably. FOR MORE DETAILS, SEE OUR sufficiency in ammonia and potash, bring us a cost of the broadest product offerings available. population by helping STRATEGY ON PAGES 18-19 advantage over competitors. st farmers to grow 1 quartile on SAFETY global urea cash healthy, affordable EuroChem 1 2 FOR MORE DETAILS, cost curve food in harmony with SEE PAGE 10 the environment. 1st quartile on WORKING DEVELOPING global DAP cash SAFELY OUR PEOPLE Logistics Sales cost curve PRODUCTIVITY One of the VISION FOR 3 4 most cost-effective FOR MORE DETAILS, FOR MORE DETAILS, SEE OUR BUSINESS 2025 SEE PAGE 12 MOP producers MODEL ON FOCUSING INCREASING globally PAGES 16-17 Our Vision is to ON PROFITABILITY become the safest, CUSTOMERS most profitable and fastest-growing 5 6 GROWTH fertilizer company FOR MORE DETAILS, Global sales Leading talent in the world. ALLOCATING ENSURING SEE PAGE 14 Operating across key world markets, Our team of more than 27,000 talented CAPITAL FULL we consistently deliver the required professionals on four continents is our greatest PRUDENTLY COMPLIANCE product volumes to customers on time asset, accelerating us towards new achievements and all year round. and driving further success. As part of this, we have built a global distribution network with production ENVIRONMENTAL SOCIAL ECONOMIC facilities located close to our sources SUSTAINABILITY STEWARDSHIP RESPONSIBILITY SUSTAINABILITY of high-quality raw materials. APPROACH We recognise our responsibility to be diligent stewards of the ACTIVE IN 15 OUT OF 17 UN GOALS natural, human and financial resources on which our Sustainability is a core driver of modern business. The business relies. UN Sustainable Development Goals provide a crucial FOR MORE DETAILS, measure of accountability and help us stay on target. FOR MORE DETAILS, SEE SUSTAINABILITY SEE OUR GLOBAL REVIEW ON PRESENCE ON PAGES 20-21 PAGES 58-81 FOR MORE DETAILS, FOR MORE DETAILS, SEE PAGES 58-79 SEE PAGES 80-81

RANKING OF SELECT PRODUCERS BY NUTRIENT CAPACITY IN 2020 (MMT) Our low-cost position in all three Nutrien 20.4 nutrient groups, vertical integration Mosaic 13.3 Uralkali 8.9 across the value chain, strong sales EuroChem (2025) 8.7 network and growth ambition have CF Industries 8.2 EXTRACTING propelled us into the leading group Belaruskali 8.1 of global fertilizer producers. Yara 7.6 OCP 7.1 At the same time, we are focused on EuroChem 6.2 becoming the best of the best. We will K+S 5.3 continue on the path outlined in our ICL 4.2 VALUE PhosAgro 4.1 Ammonia (N) Vision for 2025, driven by our ultimate OCI 4.1 Phosphoric Acid (P2O5) objective of being the top fertilizer Sabic/Safco 3.7 K2O (MOP, SOP, others) company in the world. IFFCO 3.3 Ma'aden 3.2 CONSISTENTLY Note: Excluding China.

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CHAIRMAN’S STATEMENT

COVID-19 Our overall safety performance was PEOPLE with our new EuroChem Business good, as indicated by our Lost Time System. Regarding products, we remain Firstly, I would like to express my We have more than 27,000 people on Injury Frequency Rate of 1.48. While this committed to our new generation of deepest condolences to the families of four continents, and they are our greatest is slightly higher than last year, it reflects enhanced-efficiency fertilizers, which stay colleagues lost to COVID-19. Obviously, asset. Their safety and wellbeing is our the more robust reporting standards available to plants in soil throughout the the virus leaves no company or industry overriding priority, which is why we place implemented in 2020 as we lay the growth phase. untouched, and we are ensuring that such a strong emphasis on instilling a foundations of a world-class safety every imaginable measure against its safety-first culture in the Group. With demand for more sophisticated culture. On the productivity front, we further spread is enacted to protect our fertilizers growing, our research and introduced a methodological approach to We are also improving our most important asset – our people. development operations become ever operational efficiency with the EuroChem communications and general corporate more important as we further increase EuroChem delivered a comprehensive Business System, while in terms of culture as we cement our philosophy of the nitrogen use efficiency of our response to the challenges posed by growth, we continued our rise towards One EuroChem. Our business assets are products. the pandemic. Two factors helped us to the top of the industry, increasing incredibly diverse, from mining in Russia achieve this: our operational response production capacity and expanding our to distribution in Brazil. Wherever they and our resilient business model. global distribution network. are and whatever they do, our people are MOVING FORWARD Operationally, we held daily ‘war room’ EuroChem people and have peace of Overall, despite the pandemic, demand The Group is well positioned to continue meetings of our senior executives, where mind in our open and transparent for our products remained strong, as to grow as a global leader. Additional a heightened emphasis on market communications environment. reflected by our revenues in 2020. ammonia and urea capacity is intelligence helped us to move agilely. forthcoming in Russia’s Leningrad region, We encourage all employees to report SAMIR BRIKHO Business-wise, our vertical integration with EuroChem Northwest 2 and the safety and compliance issues in a empowered us to react and optimise at STRATEGIC DIRECTION continued expansion of potash CHAIRMAN OF THE BOARD consequence-free climate: Greater each stage of the supply chain to ensure EuroChem is currently optimising its production. transparency will lead to a better, safer uninterrupted deliveries. business structure to focus on its workplace. Alongside organic growth, we also strengths as a global leader in basic and The past year has been a powerful examine new merger and acquisition premium fertilizers. This includes reminder that whatever the plan, external opportunities regularly, and we are ready increasing the Group’s presence in its ENVIRONMENTAL shocks like these provide the true test of to absorb assets that can add value. main agricultural markets, expanding a company’s resolve. It is a testament to STEWARDSHIP production volumes by launching new our business that we reported robust As with any world-class industrial In addition, while we have made great projects and continuing to improve financial results for 2020 and remain on company, our extraction and distribution progress in HSE, we will continue to EuroChem’s proactive approach capacity utilisation at existing sites. track to become the number one player operations inevitably generate emissions focus on making further improvements. To this end, the Board has decided to to the challenges of 2020 was the in the industry over the next few years. With a streamlined and vertically and other by-products that enter the establish an HSE Committee, which will We are proud of how our entire team has integrated business that provides for a environment. We recognise that as we chief driver of success. In such help to accelerate cultural change. risen to the occasion and continues to smooth and agile supply chain, we are grow as a company, so does our unprecedented times, our stable serve customers during the crisis. well-placed to ensure that customers responsibility regarding sustainability and On behalf of the Board of Directors, I worldwide receive high-quality fertilizers environmental stewardship, in terms of would like to thank all of our customers operational and financial performance ACHIEVEMENTS in a timely manner. This in turn supports both operations and products. for their continued belief in our products is testament to the resilience of IN 2020 our Mission to improve the quality of life At several facilities, we have and services during a challenging year of the world’s growing population. implemented numerous initiatives to for the planet, and our people for their Our response to the pandemic also minimise our environmental footprint, enduring resilience and commitment. the business. demonstrated our ongoing ability to It was with this Mission in mind that integrating emission-reduction processes deliver strong results in all three of Vladimir Rashevskiy was appointed as our focus areas: safety, productivity Group CEO in September. Vladimir and growth. is a gifted executive who knows the business well from his time in charge of SUEK, a sister company.

GLOBAL FERTILIZER PRODUCERS BY REVENUES1 (US$ BN)

Nutrien 20.9 Yara 11.7 Mosaic 8.7 LEADING OCP 6.2 EuroChem 6.2 Top 5 ICL 5.0 K+S 4.5 THROUGH CF Industries 4.1 producer PhosAgro 3.5 OCI 3.5 globally RESILIENCE Uralkali 2.7 1. Last 12 months, based on company filings as of 31 December 2020.

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CEO’S Q&A

In September 2020, EuroChem System, which seeks to institutionalise Importantly, our forecasts were accurate What is the importance of the announced the appointment of Vladimir best practices and continuous and our market intelligence was of high EuroChem Northwest 2 project? Rashevskiy as its new Chief Executive improvement throughout our operations. quality. Our robust pandemic response Officer. Having achieved impressive measures remain in place to keep our As part of our ongoing commitment to results over 15 years at the helm of SUEK, employees, customers and communities EuroChem Northwest 2 is part sustainability, we are working to reduce a sister company, he has deep safe, while ensuring business continuity of our drive to move beyond our emissions per tonne of fertilizer knowledge of our business, as well as worldwide. We continue to express our self-sufficiency in ammonia, a produced, which unfortunately saw a the experience and skills to lead the deepest sorrow over the tragic loss of vital component of our fertilizer slight rise in 2020 due to the demands Group into a new growth phase. Under colleagues to the pandemic and will production needs. It will also boost our of a new product mix that has been his leadership, EuroChem aims to fulfil its ensure our protection measures continue urea output capacity and market share in enabled by new capacity additions and goal of becoming the world’s leading to answer to the highest possible standards. this critical commodity product. facility upgrades. fertilizer company. We are a truly global team of more than We are constructing a state-of-the-art Initiatives such as forthcoming carbon 27,000 people, operating in over 40 plant in close proximity to our existing rail Why did you join EuroChem abatement at our new EuroChem countries and selling in more than 100. and shipping facilities, enabling easy and how can you improve the Northwest 2 facility will mitigate this. transportation to production units and business? Coupled with our cost-effective production In terms of social investment, we and access to world-class logistics, this global markets. Importantly, the plant’s For me, the opportunity to provided additional support to our local reach is driving us to the top. At the same significance extends beyond just become CEO of EuroChem communities, including funding for time, the nature of our products – fertilizers expanding our fertilizer production: it will was one that I simply could that help to feed half of the world’s also contribute to the local community’s VLADIMIR RASHEVSKIY healthcare measures needed to not refuse. With an intimate combat COVID-19. population – ensures that demand will overall prosperity. CHIEF EXECUTIVE OFFICER understanding of the Group, I have always be there, irrespective of external already identified some key operational Elsewhere, we increased output and shocks, even those like the pandemic. What are your greatest priorities areas that can be strengthened further initiated critical new large projects like moving forward? to grow our business. EuroChem Northwest 2, which will expand What is the EuroChem our ammonia and urea production Business System? As we entered a new year in a From my role at SUEK, I bring expertise significantly. We also brought our Brazil radically changed reality, certain in operational efficiency and greenfield operations fully into the EuroChem family, aspects of our approach will projects. This will help us achieve completing the takeover of Fertilizantes The EuroChem Business System remain constant. For example, additional gains as we continue to grow Tocantins ahead of schedule. applies a systematic approach to Despite the adversity of 2020, our business, both today and in the years our efforts to enhance safety, we will continue implementing our safety programme to unite all personnel behind to come. When you look back on the productivity and growth. We EuroChem delivered a robust EuroChem’s number one priority. As part coronavirus outbreak and have already identified numerous of this, we empower every employee to performance and signalled How would you characterise how EuroChem reacted, opportunities for improvement and take charge by upholding best practice 2020 for the Group? what comes to mind? savings, which will multiply out when unequivocally that the business is expanded to all Group sites. and reporting violations as they occur. Our initial response to COVID-19 We will also continue building a business built to last. The Group confidently Given the tremendous difficulties was purely operational. At daily This does not come easily. Statistically, that emphasises what we do best. This brought by COVID-19, ‘war room’ meetings, we we know that two thirds of similar will involve extracting more from existing exceeded its targets and is pressing EuroChem’s performance scrutinised the business to transformations fail because organisations assets and mitigating inefficiencies was remarkable. Despite the ensure that we were prepared, kept struggle to implement change. To mitigate ahead in its three focus areas of where possible, while meeting conditions, we confidently exceeded our people as safe as possible and could this, we are challenging operating divisions customers’ needs throughout. Another safety, productivity and growth. targets for 2020. react effectively to emerging challenges. to identify maximum improvement potential, priority is completing projects effectively We also primed our plants for ‘red status’, while helping them to achieve this through In just 19 years, the Group has become to ensure prudent capital allocation. one of the sector’s largest companies. our codename for colleagues living at effective collaboration, implementation Throughout this time, we have displayed work in shifts if needed; implemented support and capability building. Supporting all of this are our ongoing new shift patterns; and introduced a resilience that will help us to become The system ensures that we learn from efforts to ensure sustainability permeates production ‘cells’ to contain any the world’s leading fertilizer name. best practices and employees’ ideas. As the business, from top-level decision- outbreak. While certain distribution we codify these new approaches for all making to the high-quality products that In 2020, we stepped up the pace with the challenges arose, we quickly found functions and production units, we we deliver to our customers every day. introduction of the EuroChem Business solutions and continued to meet become safer and more productive. customers’ needs throughout the crisis.

EUROCHEM BUSINESS SYSTEM TIMELINE Rolling out our holistic operational efficiency improvement programme

Launched pilot operational Finalised operational Formed operational Completed extraction increase Introduced digital efficiency projects at efficiency diagnostics efficiency teams at all diagnostics at Kovdorskiy GOK monitors to boost PROGRESSING Nevinnomysskiy Azot across all production units enterprises mine and plant skip performance THROUGH FEBRUARY MARCH MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER

Established regular Launched digital Began pilot Established function to monitor Created expert performance efficiency dashboards in plant programme for Ideas operational efficiency initiatives network in Mining ADVERSITY reporting control rooms Factory initiative Division

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FOCUS AREAS IN ACTION SAFETY: IMPROVING OUR CULTURE

EuroChem seeks to maintain the highest standards of safety throughout its business, including by using advanced technological solutions. One example of this is InSight, a digital cloud-based service that collects information regarding occupational and process safety, HR, education and incidents from all Group sites. Having purchased the product from the marketplace, we have dedicated considerable resources to tailoring it to our needs. This has resulted in a system that helps us to embed a lasting safety culture throughout our organisation and, most importantly, reduce the risk of injury in the workplace. The true value of InSight is that it acts as a two-way communication channel between staff at the Group’s sites and management. Employees can report incidents directly through their smartphones, uploading pictures of unsafe conditions or violations, while managers can analyse and adjust processes critical to making colleagues’ lives safer in real time.

THE DUPONT BRADLEY CURVE: OUR ATTITUDE TO SAFETY

EUROCHEM

1 2 3 4

Reactive Supervisory Independent Interdependent ••Safety by natural ••Management ••Personal knowledge, ••Help others to conform instinct commitment commitment and ••Being a ‘brother’s ••Compliance is the ••Fear/discipline standards keeper’ goal ••Rules/procedures ••Care for self ••Organisational pride ••Delegated to safety ••Practices and habits managers SAFETY MATURITY “I follow the “I follow the rules because I rules because have to” I want to”

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FOCUS AREAS IN ACTION PRODUCTIVITY: DRIVING SYSTEMATIC ENHANCEMENT

The EuroChem Business System was introduced to ensure a structured approach to enhancing operational effectiveness, instituting global best practices and implementing continuous improvement. It does this by focusing on three core elements: performance management, efficiency improvement and cultural change. By December 2020, we had rolled out the system in the Mining and Fertilizer Divisions, where we have fully operational teams of 87 people in total, including 62 people at production sites. We have also established a process for generating new initiatives, validating their effects and conducting regular status checks with site and divisional management teams.

EUROCHEM BUSINESS SYSTEM

EFFICIENCY CULTURAL IMPROVEMENT CHANGE

PERFORMANCE MANAGEMENT

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FOCUS AREAS IN ACTION GROWTH: EXPANDING GLOBALLY

The Group’s growth strategy seeks to balance M&A activity with organic expansion to ensure that profitability is sustainable. The main highlight of 2020 was the full acquisition of EuroChem Fertilizantes Tocantins in Brazil in August. Strengthening our foothold in Latin America has been a major objective in our recent global expansion efforts. In addition, Brazil has been the main driver of regional sales, while it has the most untapped arable land among the world’s commodity-producing countries. Sales at EuroChem Fertilizantes Tocantins now exceeds 3 MMT, and its contribution to the business has enabled us to increase both profitability and market share in Brazil significantly. Alongside this, the Group made further progress in developing the EuroChem Northwest 2 project in Russia. The new facility, which will have an annual design capacity of 1.4 MMT of urea and 1.1 MMT of ammonia, will boost our production in Russia materially in the next few years.

ASIA PACIFIC 16% AFRICA 2% EUROPE 27%

SALES BY REGION US$6.2BN

LATIN AMERICA

NORTH AMERICA 16% 25% RUSSIA 14%

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BUSINESS MODEL Creating Value Sustainably EuroChem remains committed to investing capital across the Group to create sustainable value for all stakeholders. This requires upholding the highest standards of employee relations, occupational safety, environmental stewardship and stakeholder engagement.

COST ADVANTAGE VALUE CHAIN

FEEDSTOCKS/RESOURCES​ PRODUCTION LOGISTICS SALES

1ST QUARTILE ON GLOBAL UREA CASH COST CURVE NITROGEN >8 MMT1 100% SELF-SUFFICIENT

1. After EuroChem Northwest 2 comes on stream. ECNW 2 NEV AZOT NAK AZOT

1ST QUARTILE ON GLOBAL DAP CASH COST CURVE MARITIME TRANSSHIPMENT >7,000 >100 >10,000 PHOSPHATE 5 MMT FACILITIES3 RAILCARS COUNTRIES CUSTOMERS 75% SELF-SUFFICIENT WITH SALES IN RUSSIA, ESTONIA AND DISTRIBUTION BELGIUM Lifosa

ONE OF THE LOWEST-COST MOP PRODUCERS GLOBALLY 2 POTASH >8 MMT 3. In 2020, as part of a strategy to streamline logistical operations, 100% SELF-SUFFICIENT EuroChem sold its bulk terminals in Murmansk and Tuapse, Russia, to SUEK, to form a separate logistics business (NTC). EuroChem has direct access to the EuroChem Antwerp jetty, owns the Sillamäe transshipment facility in Estonia and continues to develop the Ust-Luga port terminal in Russia, which will be operated by NTC. 2. After ramp-up of both phases at Usolskiy and VolgaKaliy. Usolie CAPITAL INVESTED VALUE CREATED

NATURAL HUMAN INTELLECTUAL FINANCIAL BUSINESS SOCIAL EMPLOYEES INVESTORS FARMERS GOVERNMENT COMMUNITIES MEDIA Our sustained growth The skills and The depth and Our track record, Our business model We build lasting Our skilled and Our business model Farmers face the We foster strong We play an active part We share news of our and competitiveness experience of our breadth of our robust financial comprises production, relationships with engaged workforce generates investment challenge of delivering working relationships in our communities, successes to highlight are underpinned by more than 27,000 knowledge resources structure and prudent processing and port stakeholders, supports our growth. opportunities across increasing quantities with federal, regional investing in local the value created and our access to dedicated employees encompass all approach allow us to facilities, as well as including suppliers We offer attractive the value chain, of food to sustain the and local authorities, facilities to improve our commitment to high-quality reserves, – wherever they work aspects of the access attractive access to rail and and contractors, who careers that include delivering long-term world’s growing reinforcing our people’s quality of life. sustainable growth. including potash and in the business – business, from R&D financing options, shipping assets and a meet our high prospects for financial stability and population. We commitment to the phosphate rock. enhance our unique to internal systems underpinning global distribution standards of integrity, progression through sustainable returns. provide them with the economies in which value proposition. and processes. long-term growth. platform. health and safety. training and products needed to we operate. development. do this in a timely manner, even in the most trying of times.

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STRATEGY Aiming High EuroChem intends to become the global leader in the fertilizer industry in terms of safety, productivity and growth. Our strategy builds on our competitive advantages, including our market knowledge, vertical integration, low-cost position, geographic diversity, customer focus and dedicated workforce. By using resources prudently, the Group can help farmers to feed the growing global population sustainably.

WORKING SAFELY DEVELOPING FOCUSING ON INCREASING USING CAPITAL ENSURING FULL OUR PEOPLE CUSTOMERS PROFITABILITY PRUDENTLY COMPLIANCE

Our aim is to improve our We are working to add value by We will continue to differentiate We are steadily expanding our sales To remain a fast-growing business, Being a nimble and customer-centric occupational and process safety, developing leadership skills in ourselves in the eyes of customers capabilities to support increased we aim to deploy capital better than company requires a strong and agile productivity, environmental footprint everyone – from the shop floor to by having the broadest possible production. To stay ahead of anyone else. This prudent approach Legal and Compliance function. We

Objective and operational sustainability. the senior management – and by product portfolio and continuously the competition, we will improve ensures we only acquire assets that stay abreast of the latest laws and attracting, nurturing and retaining improving our dependability, product our operational efficiency and complement our organisation or regulations where we operate and the best talent in the industry quality and knowledge. digital capabilities. create new opportunities. ensure our people remain informed. and beyond.

TOTAL RECORDABLE EMPLOYEE NET PROMOTER SCORE (NPS) EBITDA, EBITDA MARGIN NET PRESENT VALUE (NPV) COMPLIANCE RANKING

KPIs INCIDENTS (TRI) RATE ENGAGEMENT PRODUCTION IN LINE WITH CUSTOMER DEMAND

• Climate-change risks • Shortages of skilled labour • Changes in dietary requirements • Exposure to cyclical and competitive • Risks and uncertainties relating to • Changes in government policies • Health, safety, environmental and or labour disputes and crop yields global and domestic fertilizer markets capital expenditure programmes or legislation security risks • New technologies • Production disruptions, deficits of • Risks associated with licences, • Mining-related risks • Potential for delays in delivery raw materials and price fluctuations certificates or other permits

Related risks • Exposure to credit, interest rate, foreign exchange and liquidity risks

6 >1,000 EBITDA PRODUCT PRODUCT US$1.8BN SEGMENTS LINES 2020 Nitrogen, phosphates, potash, 1.8 complex fertilizers, iron ore, 2019 1.5 industrials and feed phosphates. 2018 1.5 >10,000 CUSTOMERS

FOR MORE DETAILS, FOR MORE DETAILS, FOR MORE DETAILS, FOR MORE DETAILS, FOR MORE DETAILS, SEE MORE DETAILS SEE PAGE 10 SEE PAGES 76-79 SEE PAGES 50-53 SEE PAGES 28-49 SEE PAGES 54-57 ON PAGES 90-103

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GLOBAL PRESENCE

EuroChem’s mining, production, Over the year, at the VolgaKaliy GLOBAL FERTILIZER SALES VOLUMES EXTENSIVE EBITDA potash project, EuroChem tested MARKET SHARE IN 2020 GROWTH CUSTOMER BASE sales and logistics operations have the surface beneficiation plant and reached a truly global scale. In 2020, drilled to production layers. The site the Group continued to improve continues production in test capacity, with 40 KMT of output in 2020. 2.8% +8% >100 TOP 3 these core aspects of its business COUNTRIES GLOBALLY by implementing a blend of strategic investments and product innovations in key regions. Production from the Usolskiy potash plant reached 2.2 MMT FOR MORE, SEE PAGES 28-33 FOR MORE, SEE PAGES 34-39 01 in 2020. MINING FERTILIZERS 10 05 In 2020, the Group 33 09 03 The Group’s vertical integration begins with mining, EuroChem’s fertilizer plants in Russia, Belgium, Lithuania initiated the EuroChem 34 08 24 29 which gives it access to two of the key nutrient and China transform raw materials into a comprehensive 07 02 groups used to produce fertilizers, as well as other range of standard and enhanced-efficiency nitrogen, Northwest 2 project in 20 32 21 11 04 Kingisepp, which will 18 22 06 valuable minerals. phosphate, potash and complex fertilizers, as well as 28 several industrial products. add 300 KMT of 26 ammonia and 1.4 MMT 16 23 27 of urea to the market, 25 01 Kovdorskiy GOK 05 Novomoskovskiy Azot 09 Phosphorit while decreasing 35 02 EuroChem VolgaKaliy 06 Nevinnomysskiy Azot 10 EuroChem Northwest (1+2) emissions through 03 EuroChem Usolskiy 07 EuroChem Antwerpen 11 EuroChem-BMU carbon recycling. 04 EuroChem Fertilizers 08 Lifosa 12 EuroChem Migao Murmansk and Tuapse port terminals were divested in December 2020 to SUEK 36 to form a separate logistics business (NTC). They remain our key transshipments hubs SALES FOR MORE, SEE PAGES 40-47 LOGISTICS FOR MORE, SEE PAGES 40-47 in Russia. The Group’s global sales and distribution offices provide EuroChem ships products among its facilities and sends products to customers in more than 100 countries them onwards to customers with the help of a world-class throughout the key regions of Europe, the CIS, North global logistics infrastructure. In Brazil, EuroChem America, Latin America, Asia and Africa. 15 cemented the 30

expansion of its 12 13 Mexico 21 Switzerland (Global HQ) 29 Russia 33 Sillamäe 17 distribution network 13 by completing the 14 Argentina 22 Hungary 30 China 34 EuroChem Antwerpen jetty acquisition of 15 US (Tulsa) 23 Italy 31 Singapore 35 Murmansk 31 Fertilizantes 16 Spain 24 Belarus 32 Poland 36 Tuapse Tocantins. 17 US (Tampa) 25 Greece 19 18 France 26 Bulgaria 19 Brazil 27 Serbia 20 Germany 28 Moldova

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GLOBAL FERTILIZER PRODUCERS BY EBITDA1 (US$ BN)

We manage global mining, fertilizers, Nutrien 3.6 sales and logistics operations to provide a full range of fertilizers and Yara 2.2 industrial products to meet our EuroChem 1.8 Top 3 BUILDING customers’ needs. Mosaic 1.6 With mining assets in Russia and CF Industries 1.3 globally Kazakhstan, production and Uralkali 1.2 distribution facilities on four continents, ON OUR world-class logistics infrastructure, PhosAgro 1.2 and a sales and distribution network ICL 1.0 covering key regions, EuroChem OCI 0.8 operates on a truly global scale. STRENGTHS K+S 0.5 1. Last 12 months, based on company filings as of 31 December 2020.

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STAKEHOLDERS

We build and maintain strong relationships with a diverse set OUR PEOPLE GOVERNMENT LOCAL COMMUNITIES of organisations and people Material issues Why we engage Material issues Why we engage Material issues Why we engage from around the world. We also • Incident prevention • Our people are our • National and local • We are committed to being • Employment opportunities • We live and work in our recognise our responsibility to and HSE practices greatest asset economic wellbeing a good corporate citizen and economic wellbeing local communities be a good corporate citizen by • Hiring and retention policies • Our success relies on • Production and social wherever we operate • Environmental stewardship • We strongly believe that • Personal and professional attracting and retaining infrastructure • Governments around the • Education, healthcare good corporate citizenship caring for our environment, development opportunities the best employees • Environmental stewardship world play a vital role in the and infrastructure starts at home lives of all stakeholders local communities and people. How we engage How we respond How we engage How we engage How we respond We work transparently and • Our global and local HR teams • Installing a safety culture • We allocate considerable How we respond • We make significant • Investment in sport, health provide training courses, at EuroChem resources through engagement • Collaborating with national investments in the communities facilities, education, responsibly to create lasting development opportunities and • Prioritising employee relations with national, regional and and local authorities around our plants and facilities environmental measures, local benefits for all stakeholders. mentoring, as well as undertake • Promoting diversity local governments • Facilitating government • We build constructive relations charities and cultural activities performance reviews and equality • We carry out public relations requests with local stakeholders, • Regular payment of taxes at • We are transparent with • Expanding training work and discuss industry • Reporting transparency including other employers, the Group and subsidiary level information, give employees and development issues with trade bodies infrastructure owners, residents regular opportunities to ask • Providing structured incentives and schools executives about ongoing projects and plans, and have dedicated feedback channels

IDENTIFYING OUR MATERIAL ISSUES FARMERS AND SUPPLIERS INVESTORS MEDIA AND NGOs Engaging with stakeholders is both a driver and an outcome of our sustainability strategy. Material issues Why we engage Material issues Why we engage Material issues Why we engage Understanding our material issues helps us to • Environmentally optimal • Farmers have an essential • Sustainability and • The markets provide the • Transparency and openness • A healthy, vibrant media and establish the sustainability priorities for our practices and techniques mission to put food on ESG expectations financial resources needed • Public dialogue with members functioning NGOs are a core business and stakeholders. External perspectives • Product quality and innovation people’s tables • Financial performance to fulfil our Mission of stakeholder groups aspect of society • Suppliers play a crucial role • Feedback from investors • The media and NGOs help also provide additional context to our assessment • Timely delivery and • Reputation and stakeholder How we engage of existing and emerging risks and opportunities. reliable logistics in helping us to meet our engagement informs stakeholder priorities to keep us accountable to customers’ exacting needs • Besides regular activities like stakeholders How we engage How we engage How we respond results announcements, annual • We engage with farmers How we respond • We have access to capital • Regular reporting and timely report publications and public How we respond KEY POLICIES GOVERNING OUR directly and also through • Farmer engagement through markets, as well as established financial disclosures events, we engage proactively • Ensure stakeholder knowledge STAKEHOLDER RELATIONS partners, such as distributors agrocentres and distributors, relationships with financial • Investor conference calls and with the media and NGOs and understanding of Group • We provide a wide range of exhibitions and conferences organisations, bondholders and in-person meetings offline and online strategy and activities – CODE OF CONDUCT advisory services in many • Provision of ongoing advice other investors • Ad-hoc investor briefings • We provide expert comments • Regular calls and briefings – COMPLIANCE POLICY countries via our network and guidance, responding • We maintain a dialogue with and analysis, publish media for the media and NGOs – ANTI-CORRUPTION POLICY of agrocentres to requests key rating agencies through releases and attend • Proactive multimedia • Product launches and transparency to increase conferences, as well as host communications through associated communications investor confidence visits to inspect progress digital channels at key locations

FOR MORE DETAILS, SEE WWW.EUROCHEMGROUP.COM

WHAT OUR PEOPLE SAY

“It is extremely fulfilling to work ENGAGING for the good of humankind.” IVAN KSYKIN CHIEF SPECIALIST FOR AGROCHEMICAL SERVICES IN THE MARKETING DEPARTMENT AT CONSTRUCTIVELY EUROCHEM TRADING RUS IN KRASNODAR, RUSSIA

FOR MORE INSIGHTS FROM OUR PEOPLE, SEE PAGES 70-75

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MARKET OVERVIEW Overcoming Global Challenges Growing populations in the world’s less-developed regions and the challenges of the pandemic highlight the global need for effective fertilizers to ensure food security. These concerns support demand for EuroChem’s products amid favourable fertilizer market fundamentals. Despite slower world … led by sub-Saharan ... while greater yields … some of which will see population growth Africa, where better and efficiency will be the significant shifts in land projections, developing productivity and land focus in markets like use patterns. regions will see major use will drive crop Europe, North America population rises... growth… and Asia Pacific...

GLOBAL POPULATION SIZE AND POPULATION GROWTH GLOBAL GROWTH CHANGE IN AGRICULTURAL ANNUAL GROWTH RATE FORECASTS BY REGION IN YIELDS (2020-29) LAND USE (MHA)

3.0 14 5 PROJECTION PROJECTION

2.5 12 ASIA PACIFIC ASIA PACIFIC GROWTH RATE (%) 4 SUB-SAHARAN AFRICA SUB-SAHARAN SUB-SAHARAN 2.0 10 AFRICA AFRICA

3 NORTH AMERICA NORTH AMERICA 1.5 8 CENTRAL AND SOUTH ASIA LATIN AMERICA LATIN AMERICA

2 EASTERN AND NORTH AFRICA NORTH AFRICA 1.0 6 SOUTH-EASTERN AND NEAR EAST AND NEAR EAST ASIA EUROPE AND EUROPE AND

TOTAL POPULATION (BN) (BN) POPULATION TOTAL (BN) POPULATION TOTAL EUROPE AND CENTRAL ASIA CENTRAL ASIA 0.5 4 NORTH AMERICA 1 NORTH AFRICA AND WESTERN ASIA 0% 5% 10% 15% 20% 25% -1.2% -1% -0.8% -0.6% -0.4% -0.2% 0% 0.2% 0.4% 0.6% 0.8% TOTAL POPULATION (BN) 0.0 2 LATIN AMERICA AVERAGE ANNUAL RATE OF POPULATION GROWTH (%) 0 -0.5 0 1950 1970 1990 2010 2030 2050 2070 2090 1950 2000 2050 2100 Source: World Population Prospects 2019, the UN Department of Economic and Social Affairs Source: World Population Prospects 2019, the UN Department of Economic and Social Affairs Source: OECD‑FAO Agricultural Outlook 2020‑2029, FAO/OECD Publishing Source: OECD‑FAO Agricultural Outlook 2020‑2029, FAO/OECD Publishing

Global population growth and the threat At the same time, global food insecurity are experiencing additional impacts from MARKET FUNDAMENTALS SUPPORT On the supply side, current and expected of rising food insecurity in a post- remains an ever-present threat and one the pandemic.5 A FAVOURABLE OUTLOOK higher gas and energy costs compared pandemic world heighten the need for compounded by the COVID-19 pandemic. On the whole, the importance of the with 2020 are driving up marginal costs Farmers in these regions face the fertilizers. Governments are expected To save lives and livelihoods while agricultural and fertilizer sectors in of production and supporting higher compounding problems of diminishing to take action to ensure more secure transitioning to a greener future, the UN helping to fight food insecurity supports fertilizer prices. production, lower agricultural labour fertilizer supplies ahead of growing has recommended designating food and a favourable market outlook. opportunities and rising food prices.6 The launches of new nitrogen capacity seasons to address potential shortfalls. nutrition services as essential.2 Greater land use, improved yields and The COVID-19 pandemic has created in the first and second quarters of 2021 In 2021 and beyond, innovation and Fertilizer producers play a vital role higher cropping intensities will play bottlenecks in national, regional and appear to be delayed. This will provide rising overall demand will remain key in helping farmers to feed the world, a major role in helping these most global food systems. It has also additional support for urea prices. market drivers. This will be supported particularly amid a pandemic. We also vulnerable regions to increase highlighted food security, as well as Driving the rebound in Chinese demand by regulatory action on the national level, continue to emphasise the importance crop growth.7 fertilizer supplies, as central issues for for phosphate fertilizers is a recovery in as well as the organic growth of of distribution. The UN estimates that governments around the world. 1. World Population Prospects 2019, the UN Meanwhile, the more developed regions the country’s hog herd. This will continue Department of Economic and Social Affairs agricultural markets. more than 820 million people are going of Europe, North America and Asia to limit the supply of phosphate fertilizers 2. https://news.un.org/en/story/2020/06/1065962 hungry, even though there is more than Stronger grain prices are improving Pacific will require further yield for export, meaning a tighter global 3. https://news.un.org/en/story/2020/06/1065962 FIGHTING FOOD INSECURITY AMID enough food to feed everyone.3 farmer economics and boosting fertilizer 4. World Population Prospects 2019, the UN A GLOBAL PANDEMIC improvements to maintain crop demand across all nutrient groups. With market balance, which will support prices. Department of Economic and Social Affairs While the global population continues Notably, the UN reports that the fastest production growth rates. Some of these China continuing to buy grains and 5. http://www.fao.org/news/story/en/ As potash products remain affordable for to increase, it is currently doing so at the population growth is taking place in the markets will also see significant shifts oilseeds in large volumes, farmer item/1298468/icode/ grain, oilseed and oil palm farmers, this 6. http://www.fao.org/news/story/en/ slowest rate since 1950. The UN has least developed countries. More than in agricultural land use patterns.8 economics are expected to remain will drive demand growth for them in item/1298468/icode/ adjusted its estimates downward slightly, half of the expected population increase robust in 2021. This confluence of factors further 2021, also creating a tighter market than 7. OECD‑FAO Agricultural Outlook 2020‑2029, projecting a world population of around in the next century is expected to be FAO/OECD Publishing underscores the fertilizer sector’s in the previous year. 8.5 billion in 2030, 9.7 billion in 2050 in sub-Saharan Africa.4 Many of the 8. OECD‑FAO Agricultural Outlook 2020‑2029, important role in helping to meet the FAO/OECD Publishing and 10.9 billion in 2100.1 fastest-growing countries are already at needs of the world’s diverse the greatest risk of food insecurity and agricultural regions.

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MARKET OVERVIEW / CONTINUED

Western and Central Europe Eastern Europe and Central Asia North America Latin America Africa East Asia South Asia West Asia Oceania

DEMAND SUPPLY MARKET DEVELOPMENTS REGIONAL FERTILIZER AVERAGE MARKET PRICE CONSUMPTION (US$/TONNE)

In 2020, global nitrogen fertilizer consumption In the reporting period, the supply of nitrogen The global fertilizer market experienced NITROGEN Change SEGMENT N reportedly amounted to 107.3 MMT N, up 2.0% fertilizers remained decent. Global ammonia considerable turbulence in 2020. In the 2020 2019 y-o-y, % year-on-year. COVID-19 had minimal impact due capacity has been forecast at 181 MMT N for nitrogen segment, despite strong 3% 2% 10% Ammonia to the essential nature of agriculture and food. 2020, up 1.3% year-on-year, due to new capacity governmental support for the agricultural 6% (FOB, Black Sea) 204 233 -13% Numerous drivers pushed demand higher, in Uzbekistan, Egypt and Iran. Despite the overall and fertilizer sectors, the supply-demand 23% 14% Prilled Urea including governmental support for the environment, global production of ammonia and balance shifted significantly in favour of (FOB, Yuzhny) 225 239 -6% agricultural and fertilizer sectors and higher crop urea rose strongly, driven by environmental efficient producers. Conditions were also AN prices. In addition, key consuming countries regulations like the EU Farm to Fork and affected by lower natural gas prices, 9% 29% (FOB, Baltic) 168 186 -10% experienced better weather, particularly India, Biodiversity strategies, as well as green ammonia particularly in Europe and the US. In 4% where monsoons brought considerable rainfall, projects. Following a decline in 2019, urea addition, international flows were hit by and the US. capacity stood at 212 MMT, almost back to the trade measures, both new ones introduced level in 2018. and existing ones extended, like the EU’s anti-dumping duties on UAN against Russia, the US and Trinidad. 107.3MMT N

Despite the pandemic, global phosphate In 2020, phosphoric acid capacity remained In 2020, the supply-demand imbalance fell PHOSPHATE Change P fertilizer consumption has been projected at almost unchanged globally. In China, amid an to an estimated surplus of 2.4 MMT of P2O5. 2020 2019 y-o-y, % SEGMENT 3% 6% 47.8 MMT P2O5 in 2020, up 3.2% year-on-year. industry restructuring, efficiency initiatives and This was largely due to stronger forecast 2% 4% MAP Strong demand growth was recorded in all environmental pressures caused some project demand in key consuming countries, as 11% (FOB, Baltic) 314 339 -8% 21% major markets including China, where we timelines to be brought forward. Global well as supply constraints like trade barriers Phosphate Rock observed a reversal in the recent declines processed phosphate capacity is forecast at 46.1 and other restrictive measures. For (FOB, Morocco) 80 89 -9% 17% in phosphate consumption. Demand for MMT of P2O5 in 2020 and 47.3 MMT of P2O5 in example, in late November 2020, the US Sulphur phosphates was particularly strong compared 2021, up 2.5% year-on-year. World production Department of Commerce set preliminary 4% (FOB, Black Sea) 49 78 -37% with other macronutrients due to an of processed phosphate fertilizers is projected duties on phosphate fertilizer imports from 32%

exceptionally low base in 2019, lost production at 33.5 MMT of P2O5 and 68 MMT of products, Morocco and Russia. This followed in China and parts of India at the start of 2020, flat compared with 2019. MAP output is expected investigations into whether producers in and disrupted trade flows prompted by the US to increase, especially grades with sulphur like the two countries were receiving unfair CVD case. NPS and MES, while DAP and TSP production subsidies from their governments. are due to fall. 47.8MMT P2O5

Global potash fertilizer consumption has been Global potash capacity reportedly totalled 62.6 In 2020, the derived potash supply-demand POTASH K Change estimated at 36.4 MMT of K2O in 2020, up 1.6% MMT of K2O in 2020, up 4.6% year-on-year. New imbalance grew, as the potential surplus 2020 2019 y-o-y, % SEGMENT year-on-year. Supported by continued excellent capacity appeared in Russia, which added 1.4 increased by 0.4 MMT of K O to 6.3 MMT 1%1% 8% 2 9% 4% sMOP farmer potash affordability globally, the outlook MMT of K2O (2.3 MMT of MOP), and Belarus, of K2O. Following less favourable conditions (FOB, Baltic, spot) 210 265 -21% 14% is for a stronger pace of demand growth in 2021. which commissioned 0.9 MMT of K2O (1.5 MMT in 2019, the global potash market improved gMOP of MOP). At the same time, its effect was limited, somewhat in 2020. In terms of regions, (CFR, Brazil) 241 330 -27% as commercial production has just begun. After a potential surpluses in Eastern Europe and 38% sMOP 22% 3.3% year-on-year drop in 2019, world primary Central Asia should continue to rise, and (CFR, South-East Asia) 247 298 -17% potash production edged up by 0.8% year-on- the deficits in Latin America and South Asia 3% year to 42.1 MMT of K2O in 2020, amid improved to increase. market fundamentals and growing potash demand. Meanwhile, global MOP output is expected to reach 67 MMT of product, up 0.9% year-on-year. 36.4MMT K2O

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OPERATIONAL REVIEW

Usolskiy Potash Mine: The tiger stripes of the sylvinite Mining layer located 500 metres Division underground. Expanding Responsibly

LAWRENCE BERTHELET HEAD OF MINING DIVISION

While priorities in life and business might change, the Mining Division considers the safety and wellbeing of its people – the most important resource – not just a priority, but a core value.

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OPERATIONAL REVIEW / CONTINUED MINING DIVISION

EuroChem also continues to advance USOLSKIY MOP PRODUCTION Our comprehensive approach is aimed The Mining Division is responsible the SaratovKaliy deposit, which includes OUR PEOPLE: at demonstrating to employees that we for sourcing and supplying the raw a drilling and exploration programme, HEALTH AND are both fair and aligned with their real a two-dimensional seismic survey, core materials needed to produce two of 2.2MMT needs, while placing a strong emphasis collection and analysis, as well as a SAFETY on producing the results needed to the three key nutrients used in basic 2020 2.2 pre-feasibility study. At SaratovKaliy, the In 2020, we focused on increasing prevent harm to our people, visitors Mining Division has six licence areas that and complex fertilizer production: 2019 1.1 and improving safety reporting while and neighbours. phosphates and potash. represent the potential to develop a dedicating significant resources to health 2018 0.25 mineral-rich potash zone, as well as salt, due to COVID-19. We also trained our site In addition, we implemented a pilot magnesium salts (carnalite), a thick staff, both managers and safety field-level risk analysis (FLRA) programme polyhalite zone and an area containing professionals, to investigate incidents at our Kovdorskiy and VolgaKaliy naturally occurring potassium operations. This aims to ensure that both POTASH CAPACITY* using root-cause analysis. This vastly sulphate (SOP). improves our ability to identify the line workers and first-line supervisors take time each day to assess their The Group has organised a programme underlying causes of incidents and personal risk and respond accordingly. and schedule to continue with a the quality of our corrective actions. >8MMT Similarly, should the job change during bankable feasibility study, extensive The data suggests that our issues are no the day, we encourage workers to review three-dimensional seismic analysis, different from those in other industries. their FLRA card and re-assess risk. This geotechnical survey work, rock IRON ORE PRODUCTION (2020) Overall, the root cause of 80% of simple yet effective personalised risk mechanics, a hydrogeological survey, incidents is behavioural. Such incidents assessment helps to keep our people a mine plan and surface topographic are caused by failing to identify risks or focused on activities and areas that could surveys. Together, these will define the MMT performing unsafe acts, compared with cause an incident, and then rely on our 5.5 best future site of a mine capable of incidents arising from inherently unsafe policies and procedures to mitigate risk. producing a minimum of 2 MMT a year of conditions. In addition to auditing, APATITE CONCENTRATE PRODUCTION (2020) potassium chloride (MOP) and potentially reviewing and improving our labour At Kovdorskiy, Usolskiy and VolgaKaliy, other salts as defined by the study. conditions in 2020, we made a we implemented a pilot lock-out, tag-out considerable shift in thinking towards (LOTO) programme, designed to make 2.2MMT behaviour. This includes performing energy control more efficient and reduce 01 Kovdorskiy GOK more rigorous follow-up after accidents; the risk of injury due to unsafe behaviour. sharing best practices not only within In 2021, we will continue to monitor and the Mining Division, but also throughout improve corrective actions from incidents, EuroChem Usolskiy the Group and broader industry; and 03 OVERVIEW Safety first: Dashboards are while working on programmes that target revisiting our “Safety Absolutes”, work behavioural change. The Group operates four mines, two located across our mining and practices that help to avoid death or EuroChem SaratovKaliy of which are above-ground, open-pit production facilities. serious injury. phosphate mines that support fertilizer production: Kovdorskiy GOK in Russia and 02 EuroChem VolgaKaliy EuroChem Fertilizers near Karatau in 04 EuroChem Fertilizers Kazakhstan. Iron ore and baddeleyite (a zirconium-based mineral) are also mined at Kovdorskiy as by-products. Our other operations are underground potash mines: Usolskiy, near Berezniki in the Perm region of Russia (which is gradually ramping up production), and VolgaKaliy, near Kotelnikovo in the POTASH Volgograd region and close to the Black Sea. The Mining Division includes three other operating assets: a large manufacturing facility in Berezniki that makes all types of Usolskiy 2 ore handling equipment and sells it along UNDERGROUND VolgaKaliy POTASH with associated services to Russia’s mining industry; a civil and mechanical MINES contracting company that we continue to use on various capital and maintenance projects at Usolskiy; and a drilling joint venture that supports exploration to PHOSPHATE determine our resources and reserves for all of our various potash and salt licence areas in Russia, including those being developed and numerous future sites.

Kovdorskiy GOK 2 OPEN-PIT EuroChem Fertilizers PHOSPHATE MINES * After full ramp-up of both phases at Usolskiy and VolgaKaliy.

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OPERATIONAL REVIEW / CONTINUED MINING DIVISION

In 2020, significant pre-engineering and Significant progress was made on the PHOSPHATE DEPOSITS OPERATING REVIEW research work was performed on our mine plan at VolgaKaliy. The application The Mining Division has two operational waste streams, as part of a continued of state-of-the-art three-dimensional open-pit phosphate mines. At Kovdorskiy, POTASH DEPOSITS effort to achieve our environmental seismic information and thin seam production for the year totalled 5.5 MMT USOLSKIY goals. Testing was done on reverse analysis programmes to map the of iron ore, 2.2 MMT of apatite The Usolskiy potash project produced osmosis, surplus brine disposal and potash and salt layers in great detail concentrate and 5.9 KMT of baddeleyite over 2.2 MMT of product in 2020 and is sludge dewatering, as was extensive considerably advanced our knowledge of (zirconium). At EuroChem Fertilizers, in fully capable of achieving the first-phase engineering on dewatering through the ore body. We coupled this with bore Kazakhstan, 690 KMT of phosphate ore annual design capacity of 2.3 MMT. evaporation. We continue to lead hole data to confirm and calibrate the 3D was produced. Performance analysis shows that in the industry, as we examine all modelling. This allowed us to optimise Usolskiy can be ramped up further to environmentally acceptable ways the potash pay zone and to mine product produce even greater potash volumes of handling waste streams. at an efficiency commensurate with that The open-pit mine at Kovdorskiy than originally planned, with some minor of our milling capacity. Our mining teams have met the GOK provides a reliable supply changes as the site continues to improve of feedstock such as phosphate operations. Our granulation capacity will challenge of increasing ore production In 2021, we are aiming to overcome to implement our strategy of expanding previous issues found with this new rock and by-products exceed our initial projections, which like iron ore concentrate. speaks highly of our designs, team and beneficiation capacity. We have geology. This should ensure more organisation, as this product is now one performed extensive reviews of workflow regular ore production to match the of the best in the industry and in high processes; are researching and testing growing shaft capacity. new ways of increasing tonnes per demand. Significant upgrades to our In the reporting period, we completed manshift; and are seeking innovative existing hoists improved our reliability in another successful batch run of our ways to enhance ore productivity. this area, allowing us to fully implement beneficiation plant, producing around production at the mine. VOLGAKALIY 40 KMT of test product. This allowed us Continuing this ramp-up of our The work on shaft construction to test and commission our rail loading beneficiation plant helps to identify areas at VolgaKaliy continued in 2020. and product handling facilities. The second production shaft proceeded where we can make improvements. This In 2021, we will continue to run in batch as scheduled, while waterproofing of the allows us to continue the design of the mode to reach the production plan and entire section was conducted. The hoist expanded first-phase tonnage and to further ramp up both our underground and conveyance systems were ordered engineer Phase Two, which has a target and mill facilities. capacity of more than 4 MMT annually. and are being designed, along with internal shaft steel. We also performed significant pre- engineering on mine planning for Phase Sinking from mine haulage levels in this Two in 2020. This included analysing shaft to the bottom will conclude in 2021, mine planning improvements and gaining after which the mine steel and headframe a better understanding of the ore body to modifications for the hoist and skips will define the type of underground mining begin. The first shaft is doing double duty needed for increased capacity. Work as both hoist and cage, while handling continues on the front-end engineering development ore requirements. The cage of a Phase Two expansion at VolgaKaliy. shaft freeze efforts continued in 2020, and the shaft will be sufficiently frozen to POTASH CAPEX resume sinking in 2021. To date, we have invested approximately US$5.3 billion across the two sites. The development of the first phase at both Usolskiy and VolgaKaliy is a key RD STATUS OF 3 SHAFT element of delivering our overall business AT USOLSKIY plans and growth strategy, with self- sufficiency in this main nutrient now ⊳ achieved. We intend to maintain our With Phase One of Usolskiy’s position as one of the world’s most development complete, ramping up cost-effective potash producers with to Phase Two requires the a gradual increase in production. construction of a new skip shaft to help haul at least 1 MMT/a of additional potash to the surface.

POTASH PRODUCTION INCREASE 356m (YEAR-ON-YEAR) MINING-RELATED RISKS The information received contextualises any risk and enables us to modify DEPTH REACHED +100% Usolskiy Potash Plant: The surface The mining-related risks that EuroChem beneficiation and processing facility mine plans if needed, including main As of December 31, 2020 * faces are due mostly to geotechnical POTASH CAPEX line development and room spacing. is now operating at full Phase One issues and rock mechanics. To mitigate In addition, we continue to advance our design capacity of 2.3 MMT/a. them, we monitor our pillar and room backfilling project to manage subsidence conditions using strain gauges and other 511m US$ BN requirements in accordance with the 5.3 instrumentation. * Spent to date on both projects. approved design.

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OPERATIONAL REVIEW

EuroChem Northwest ammonia plant reached Fertilizers its full design capacity of Division 1 MMT in 2020. Producing Sustainably

OLEG SHIRYAEV HEAD OF FERTILIZERS DIVISION

Thanks to our cost- efficient production base, smart resource allocation and sheer determination to support our customers, we have pushed our output volumes to record levels this year, allowing the business to flourish.

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OPERATIONAL REVIEW / CONTINUED FERTILIZERS DIVISION

We make hundreds of products at our TOTAL PRODUCT OUTPUT strategically located manufacturing and (FERTILIZERS) blending facilities in Russia, Belgium, Lithuania, Brazil and China. Together 27.9MMT with our secure and sustainable supply of raw materials, this geographic spread ECNW 1 AMMONIA PRODUCTION (KMT) ensures that our plants are among the Volumes most cost-efficient of their kind. +26% 2020 994 2019 791

Utilisation +11pp 2020 97.3% 2019 86.8%

OVERVIEW In 2020, EuroChem produced 27.9 MMT of core fertilizer products, up 4% year-on-year. 10 EuroChem Northwest (1+2) In the first full year of operations for 09 Phosphorit EuroChem Northwest 1, our new ammonia production plant in Kingisepp, we also 08 Novomoskovskiy Azot 07 Lifosa 05 upgraded production equipment at several plants and made the landmark investment decision to expand our ammonia and urea EuroChem Antwerp capacity further with the construction EuroChem-BMU 11 06 Nevinnomysskiy Azot of EuroChem Northwest 2.

Among other occupational health OUR PEOPLE: and safety incidents, during the Located in the heart of Europe, our HEALTH AND recommissioning of a new ammonia plant Antwerp facility comprises nitric 12 EuroChem Migao at Novomoskovskiy Azot, a gas bypass acid plants, NPK and AN/CAN units, SAFETY line ruptured and caught fire. and a nitrophosphoric acid plant, as In 2020, we continued to implement the well as multiple logistics assets. Other initiatives and pilot projects during Group’s strategy aimed at improving the year included conducting behaviour safety by applying a more effective safety audits and spotting near misses, approach. This included investing in new as well as installing in-vehicle monitoring safety processes, upgrading training and systems (IVMSs) to ensure safe driving. rolling out a raft of measures to In addition, we employed the LOTO encourage a sea change in thinking. method for locking and tagging hazards Sadly, we must report one fatality during at all of our 110/35 kV substations. the year. While this is one fewer than Pilot LOTO projects are also under we experienced in 2019, we recognise way at various production units of that any loss of life is unacceptable. Novomoskovskiy Azot, Nevinnomysskiy The incident involved a synthesis Azot and Phosphorit. operator at Novomoskovskiy Azot’s Urea‑2 plant, who was fatally injured by a burst of liquid ammonia while inspecting a leakage.

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OPERATIONAL REVIEW / CONTINUED FERTILIZERS DIVISION

DEVELOPMENT AND compression unit at one of our urea OPERATING Among projects that the division will OPERATING REVIEW plants to reduce annual maintenance and continue implementing in 2021 are 2. CONSTRUCTION annual servicing costs, eliminate lost PERFORMANCE further developing the production Successful application of Risk Based ENVIRONMENT As we strive towards market leadership, production, stabilise product yield and In 2020, as part of the rollout of the system, adopting smart manufacturing Maintenance and Primavera systems at At EuroChem-BMU, upgrades to the in 2020 we continued to improve the quality, as well as improve wastewater EuroChem Business System, we set up processes and introducing production EuroChem Northwest, which resulted in sulphuric acid plant are underway. reliability, quality and cost-efficiency of treatment. Meanwhile, work to expand a department in the division and teams data analysis. shortened turnaround time, eliminating This will help to achieve a contact rate of our production. This included upgrades the capacity of a compound fertilizer at sites to train personnel in production planned downtime and increasing output. at least 99.8% and reduce unit emissions of existing plants and investments in plant was temporarily suspended in system development, digitalisation and We mitigated the risk of business plan of sulphur dioxide to levels that best new facilities. October 2020, due to the ongoing analysis of operational data. In addition, target non-fulfillment through: we are publishing videos and guidelines 3. available technologies allow. At Novomoskovskiy Azot, we upgraded effects of COVID-19. to teach staff about EuroChem Business Successful execution of investment an ammonia plant to increase capacity In 2020, Nevinnomysskiy Azot continued At EuroChem Antwerpen, construction System tools. 1. projects to sustain Ammonia and Nitric while reducing energy consumption. to upgrade the treatment plant at its and installation continued on a scrubber Rescheduling melamine, urea and Acid plants at Novomoskovskiy Azot. biochemical wastewater treatment and We began replacing outdated UAN for the NPK plant to improve During the year, Nevinnomysskiy Azot ammonia facility turnaround maintenance production waste neutralisation plant. equipment, a process that will continue in environmental performance by reducing completed a performance improvement to 2021 at Nevinnomysskiy Azot following This will reduce concentrations 2021. We also started building a plant to dust and ammonia emissions. The project pilot. A visual production control adviser the activities to improve equipment of pollutants. produce liquefied carbon dioxide, which should be completed in late 2021. We and management practices improved the reliability and performance. The largest producer of phosphate will help to reduce our environmental also approved an initiative to reinforce average productivity in NPK grades mineral fertilizers in the Baltic States Elsewhere, Phosphorit pressed ahead impact by disposing of greenhouse the conveyor gallery to keep product 16:16:16 and 17:17:17 by 25 tonnes per and an industry leader in the with its comprehensive survey of the gases generated by ammonia production. shipments on track. It will replace the day, while process standardization European Union, our Lifosa plant in Luga River in the wastewater outfall area In addition, we rebuilt a nitric acid line older support structures and foundations reduced the amount of preventive Lithuania produces premium-quality to minimise the effect of its discharge. with a new gas turbine unit to improve of the conveyor gallery and is due for maintenance by 15-20%. commercial DAP and feed FOR MORE DETAILS, SEE SUSTAINABILITY reliability and reduce the energy use per completion in late 2022. In addition, we phosphates. REVIEW ON PAGES 58-81 tonne of acid produced and the have contracted for a new ship unloader associated carbon emissions. that is due to be replaced in early 2022. At Nevinnomysskiy Azot, we began a Work also continued on a new building three-year project to build a potassium that will house all technical services of nitrate plant that will make the product EuroChem Antwerp. Commissioning is from potassium chloride and ammonium scheduled for April 2021. nitrate melt, with ammonium chloride (a Our development and construction nitrogen fertilizer that contains at least activities also included numerous 24% nitrogen) as a by-product. We also initiatives at Lifosa, Phosphorit, upgraded the cryogenic tanks at some of EuroChem-BMU and EuroChem our liquid ammonia tank farms to improve Northwest, as well as work on the new safety at outdoor and indoor production EuroChem Northwest 2 project. areas. We upgraded the carbon dioxide Novomoskovskiy Azot is one of Russia’s largest producers of nitrogen fertilizers and ranks first in Russia in urea volumes.

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OPERATIONAL REVIEW

Commercial Division In 2020 EuroChem strengthened its presence in Leading Brazil, a core growth market Together for the Group.

STEFAN JUDISCH CHIEF COMMERCIAL OFFICER

Our heightened customer focus, combined with our unmatched ability to place the right products in the right markets, is what ultimately generates strong margins for the Group and provides the platform for further growth.

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Our ability to place all goods produced SALES (KMT) in our mines and factories in the global Sales 2020 2019 ∆, y-o-y Nitrogen products 8,949 8,652 3% markets reflects the strength of our Phosphate products & 6,774 6,228 9% distribution and sales network. We complex fertilizers, incl.: leverage this market presence by Phosphate fertilizers 2,681 2,542 5% placing selected products from others. Complex fertilizers 3,705 3,297 12% Potash fertilizers 2,191 1,104 98% EuroChem is one of a very few global Total fertilizer sales 17,914 15,984 12% Mining products 5,737 5,622 2% fertilizer companies with production Industrial products 1,975 2,018 -2% capacities in all three major nutrient & other sales groups – nitrogen, phosphate and TOTAL, incl.: 25,626 23,624 8% potassium – enabling us to offer a 3rd-party products 5,349 4,844 10% full portfolio of basic and premium compound fertilizers. Besides fertilizer, TOTAL SALES, KMT we sell our iron ore concentrate, phosphate rock, baddeleyite, aluminium +8% fluoride and many other products to our 2020 industrial and animal feed customers. 25,626 2019 23,624

SALES OVERVIEW 35 13 Mexico 21 Switzerland (Global HQ) 29 Russia In 2020, the Commercial Division sold and 14 Argentina 22 Hungary 30 China shipped 25.6 MMT of products, an increase of 8% year-on-year. 15 US (Tulsa) 23 Italy 31 Singapore 16 Spain 24 Belarus 32 Poland Fertilizer sales volumes totalled 17.9 MMT, up 12% on 17 US (Tampa) 25 Greece 2019. Sales volumes of mining products climbed 2% to 5.7 MMT. 18 France 26 Bulgaria 19 Brazil 27 Serbia Our ability to hold sales figures so close to 20 Germany 28 Moldova production volumes, despite the pandemic, proves the resilience of our business model during 33 challenging times. 29 A 10% increase in third-party sales volumes 34 underscores our ability to place product in markets globally through our logistics and distribution network. 32 24 20 18 21 Whether working remotely or on site, 22 OUR PEOPLE: teamwork has never been so important. Sales to Brazil accounted for 22% For the Group as a whole, what we do 16 28 HEALTH AND of total revenues in 2020. 27 today – how we respond and support 23 26 SAFETY each other – will have a direct and lasting 36 Throughout 2020, a major focus for impact on our business. 25 EuroChem was ensuring that we Despite this increased commitment to 15 continued to meet the needs of our safety, we must sadly report one fatality customers and business partners – the in the division in 2020. In October, suppliers, distributors and others who 17 a contractor at the Depo-EuroChem work with us. facility in Nevinnomyssk died during work LOGISTICS* 13 Among our primary concerns were our on a trench. Extensive root-cause analysis revealed a number of underlying 33 Sillamäe 30 employees. Many in the Commercial 34 EuroChem Antwerpen jetty Division, especially in the logistics and factors, including poor planning and risk assessment. 35 Murmansk supply chain functions, are required to remain on site to ensure production 36 Tuapse 19 We work tirelessly to train colleagues, vet continuity, while other support functions contractors, and constantly review are also unable to work remotely due to procedures in order to prevent such technical considerations. * In 2020, as part of a strategy to 31 occurrences, and will redouble our streamline its logistical operations, efforts to fight against any perceived the Group sold its bulk terminals in 14 Murmansk and Tuapse, Russia, to complacency towards occupational and SUEK, to form a separate logistics process safety. business (NTC). 42 www.eurochemgroup.com EuroChem 2020 Annual Report and Accounts 43 Strategic Report Corporate Governance Financial Statements

OPERATIONAL REVIEW / CONTINUED COMMERCIAL DIVISION

IMPROVING CUSTOMER LOGISTICS EXPERIENCE Logistics has a vital role in our business, Customer service is an essential pillar of and our supply chain operations meet our success. In 2020 we strengthened our customers’ needs. our customer service function to drive our commercial transformation. In 2020, we sold our ports in Tuapse and Murmansk to our sister company To benchmark ourselves, we undertook SUEK, which is now responsible for our largest-ever global customer survey. all owned and long-term contracted The 2020 customer survey highlighted logistics infrastructure in our core that product quality is a defining driver production locations. for customer satisfaction, and revealed that further improvement is critical to The use of combined logistic assets deliver on our commitment to our allows us to optimise operations within customers. In response, a Quality Task a much larger logistics asset portfolio Force was created to review our product – for both service and value through quality system and ensure feedback from scale, process efficiency and customers is incorporated across capacity utilisation. the business. In 2021 these combined logistics assets Providing high-quality products, are to operate under the separate NTC delivering on promises and being easy to brand name. do business with: together, these characteristics enable us to cultivate long-term relationships with customers, and ultimately become their trusted supplier of choice.

IRON ORE In 2020, as pandemic-related lockdowns took effect worldwide, market uncertainty impacted our sales of iron ore. The collapse of a key rail link to Russia’s Murmansk port further challenged Our transshipment operations in operations. Damage occurred in May Sillamäe, Estonia, on the Gulf of during flooding in Murmansk region, Finland, handles liquid cargo as well which disrupted rail connections as dry fertilizer products. Proximity with our main iron ore export port. to facilites in Kingisepp maintain our Alternative routes and supply options cost advantages. were optimised via Baltic ports and rail links to China.

From mine and factory to farm, our customers’ needs. Within the Warehouse operations at EuroChem OPERATING REVIEW underpinned by end-to-end global supply Commercial Division, our supply chain Fertilizantes Tocantins. chain, largely based on owned and/or offers many touchpoints with partners, FERTILIZANTES long-term contracted logistic customers and end users of our products, TOCANTINS infrastructure and distribution whether industrial and feed products or In 2020, we made further progress capabilities, our business integration fertilizers. These multiple and constant in expanding our presence by acquiring enables us to ensure full control of interactions test, and improve, our the remaining share of our subsidiary, product quality while providing our flexibility and ability to adapt. EuroChem Fertilizantes Tocantins, which customers with consistent supply. is now 100% owned by EuroChem Group. This reliability was a differentiator during the most challenging periods of the RESHAPING EXPERIENCE pandemic in 2020. AND TOUCHPOINTS We firmly believe that customers will CUSTOMER FOCUS: return to the companies that serve EUROCHEM’S RESPONSE them well during these difficult times. COVID-19 has changed the way most Fundamentally, our story remains the of us operate, and this will most likely same: From standard to enhanced- impact business processes in the years efficiency fertilizer products, EuroChem to come. Our long-term success resides offers the broadest product mix in the in our ability to identify changes across industry, with a portfolio of more than the business model and adapt to the 1,000 product lines. ever-changing requirements to best meet

44 www.eurochemgroup.com EuroChem 2020 Annual Report and Accounts 45 Strategic Report Corporate Governance Financial Statements

OPERATIONAL REVIEW / CONTINUED COMMERCIAL DIVISION

Regional highlights

EuroChem has a highly 2020 5.1 2020 6.2 2020 5.1 2020 3.2 2020 6.2 developed and reliable 2019 6.9 2019 6.0 2019 4.3 2019 3.1 2019 3.9 distribution platform in

place to service strong SALES (MMT) CIS EUROPE SOUTH AMERICA NORTH AMERICA ASIA demand in the world’s Modest 2020 sales figures in the CIS Despite uncertain market and In 2020, South America remained one Since our acquisition of BenTrei in 2015, In 2020, despite global and regional were mostly attributable to the challenging conditions due to COVID-19, of our priority focal points, as expansion we have continued to expand our challenges, EuroChem experienced key growing regions. redirection of iron ore volumes to the Group increased sales in Europe of the agricultural business continued presence and distribution across the US, record sales and revenues from Asia, We ship our industry- higher-margin regions in Asia. incrementally in 2020. to support strong growth in fertilizer Canada and Mexico. This growth has where the launch of bonded warehouse demand. Within the region, Brazil has the been underpinned by a simple idea: to operations in China brought greater leading product The Russian agricultural industry exhibits In the second half of the year, we greatest potential in terms of untapped focus on providing our customers with flexibility and market access for our stable growth and has further potential to redirected volumes of urea and portfolio to farmers all arable land among the world’s main food the products that they need, including products. As a whole, the region increase grain production by boosting phosphate fertilizers in response to producers, which therefore presents high-quality fertilizers. accounted for 6% of overall over the globe, while yields through intensification. In 2020, it stronger demand in other regions, a significant opportunity. fertilizer sales. our flexibility enables expanded by 2% year-on-year, after limiting sales of them in Europe. In 2020, our North American business us to react to new returning an additional 100,000 hectares Regarding urea products, higher demand During the year, to improve our position had another record year, accounting for Asia is the world’s largest importing of arable land to cultivation and in India from the third quarter drove up in South America, we fully acquired 16% of Group sales. The year was also region of potash fertilizers and the main demand as it arises. improving the average yield. Despite global prices, disincentivising European EuroChem Fertilizantes Tocantins, having our first as a fully integrated regional unit, consumer of NPK products in general, various external shocks, the industry also buyers from taking on stock at higher first bought a majority stake back in 2016. following the merger of BenTrei and and these two groups represent the core fared relatively well: Amid the COVID-19 prices out of season. As for phosphate EuroChem USA into EuroChem North of our strategy there. We are the largest In the reporting period, EuroChem pandemic and a drought in the south of fertilizers, following the US Department America in October 2019. supplier of the liquid UAN fertilizer Fertilizantes Tocantins outperformed Russia, it finished the year with a second of Commerce’s announcement in August in Oceania, while Nitrophoska® and the market, increasing sales by 20% Throughout the year, whereas many record harvest. of a trade investigation into Russian and ENTEC® brands have been present year-on-year, and securing an estimated distributors experienced supply issues Moroccan producers, EuroChem in Asia for over 60 years. Meanwhile, the fertilizer market outpaced 8% share of the Brazilian fertilizer market. due to flooding, the flexibility from our allocated more from its Lithuania site to the agricultural industry, expanding by an In addition, it improved productivity deep-water access points, warehousing The Group has two sales offices in the the US market to mitigate the risk of estimated 10% year-on-year, with annual following the opening of new blending and well-established distribution network region, in China and Singapore, and we import duties. The effect of these was consumption having reached 11.5 MMT. units (at Sinop and Catalâo). Another supported our commitment to customers. expect it to remain a major consumer more than offset by an increase in sales In 2020 EuroChem had an 18% share of highlight was the launch of a new plant Through our vertical integration, we were of our potash fertilizers. of other products, however, particularly the domestic market, making the company in Araguari, which will support able to ensure a consistent and reliable basic nitrogen, compound NPK and Russia’s second-largest supplier. additional growth. supply of one of the broadest fertilizer potash fertilizers. portfolios. We fulfilled our promises and Supply to Azerbaijan and Armenia was In 2020, the Group boosted its overall Meanwhile, we further expanded and increased market share by lowering risks affected by the armed conflict that broke sales in South America to a record 5.1 diversified our product portfolio in for our customers. out in 2020, while market competition MMT, of which 4.4 MMT were in Brazil. Europe. While continuing to roll out increased due to new suppliers in This came amid higher potash volumes, In Canada, our presence in the east and standard and granular potash fertilizers in the region. coupled with an increasing national west of the country, combined with numerous countries, we expanded sales presence, with notable expansion in best-in-class distribution in the US and of higher-quality nitrogen and phosphate the south and southeast of the country. Mexico, allowed us to exceed our 2020 products containing sulphur. This will Our solid foothold in the region supports forecasts. Given our aspirations to support the long-term profitability of our our ambitious growth targets. Here, in expand distribution in the US further, sites in Belgium and Lithuania. one of world’s fast-growing markets, we 2021 is poised to be another positive One notable growth area was Eastern have the goal of doubling sales volumes year there. Europe, where the Group again over the next few years by expanding our In Mexico, where demand for our experienced record sales in 2020. product offering. products has been rising steadily, Particularly strong demand came from we achieved a record performance. the Baltic states, the Balkan countries Our market share in the country reached and Poland, where we opened a sales an estimated 10%, making us the fourth office and established a logistics hub in largest supplier of fertilizers there. the Western port of Szczecin.

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OPERATIONAL REVIEW / CONTINUED

In June 2020, EuroChem established the Large LARGE CAPITAL PROJECTS DIVISION STRUCTURE Large Capital Capital Projects Division to manage major HEAD OF DIVISION Projects Division projects with budgets exceeding US$100 INVESTMENT MINERAL AND CHEMICAL OCCUPATIONAL PROCUREMENT FINANCIAL CONTROLLING PROJECTS HEALTH AND million. By planning, INDUSTRIAL SAFETY Executing implementing and PRE-FEED LOGISTICS OPTIMISATION ENVIRONMENTAL CONTRACTS PROJECT controlling such projects, PROTECTION MANAGEMENT Ambitious the new division aims to increase the return on PRICING AND COST POWER GENERATION AND IT ESTIMATION COAL MINING PROJECTS investment and ensure DEPARTMENT Plans predictable results. OIL AND GAS ASSETS HR DEVELOPMENT NEW PROJECT MANAGEMENT APPROACH SECURITY The Large Capital Projects Division grew 4 DESIGN INSTITUTES out of the Mining Division’s Project Management department. It also consolidated existing internal expertise in a single platform. The Group’s new project management process applies a gated approach with FIVE PROJECT STAGES PRIORITIES FOR 2021 five stages: initiation, concept, selection, Each stage has a transition gate with predetermined • Handover of all major initiatives to planning and execution. The Large requirements in the form of checklists covering the most the Large Capital Projects Division; Capital Projects Division is responsible important areas that affect project performance. • Develop the division into a ALEKSEJ VERTYAGIN for the final three stages. comprehensive corporate ACTING HEAD OF LARGE CAPITAL PROJECTS DIVISION G0 G1 G2 G3 G4 competence centre; DESIGN INSTITUTE • Staff the division with experts in key TRANSFORMATION Initiation Concept Selection Planning Execution business areas; The Large Capital Projects Division is Operational divisions Large Capital Projects Division also working to transform EuroChem’s • Incorporate the core aspects of the design institutes into scientific and CAPEX management system; technological decision centres. This • Develop and implement a complete set involves a phased integration approach TRANSITION GATE CHECKLISTS* of project management standards, EuroChem’s ambitious focused on in-house customer G0 G1 G2 G3 G4 processes and tools; development plans requirements for existing and future Project presentation • Introduce the basic set of IT tools, capabilities. The process consists of Financial and economic model including automated budgeting and depend on successfully three stages, the first of which has Production and sales plan schedule reporting; already been completed. implementing projects Design and technology • Progress 80% of specialists through Reserves, production and refining plan the Project Academy’s general and first-level dedicated trainings; with capital expenditure (for mining projects only) DESIGN INSTITUTE Contracts and procurement • Develop and implement the first totalling more than US$5 DEVELOPMENT STAGES phase of the design institute Regulatory documents development strategy. billion over the next and permits Stage I: Tax and financial preferences five years. Our division determine competence centres Land and infrastructure is contributing to the and interaction model Finance and legal services Risk analysis Group’s overall financial Stage II: Implementation planning stability by improving the transfer to centralised functions (construction stage) and operational standards Operations planning return on equity capital * Each stage of each section comprises its own set of documents. from such initiatives. Initial assessment Stage III: develop scientific and The Large Capital Projects Division collaborates closely with technological decision centres EuroChem’s other divisions to find effective ways of executing mining and production initiatives.

48 www.eurochemgroup.com EuroChem 2020 Annual Report and Accounts 49 Strategic Report Corporate Governance Financial Statements

OUR PRODUCT PORTFOLIO Focusing on Customer Needs EuroChem offers an INDUSTRIAL PRODUCTS AGRICULTURAL PRODUCTS ESSENTIAL PLANT NUTRITION innovative mix of products Our vertically integrated business model yields Our premium nitrogen, phosphate, that focuses on farmers’ more than just fertilizers. Throughout our production potash and complex fertilizer products are AN DAP needs for ever more efficient chain, our ability to synthesise industrial products designed to keep their properties longer, AS coarse MAP fertilizers, helps to feed a AS fine NP adds depth, sustainability and value to our guaranteeing an optimal supply of nutrients ASN growing global population MOP granular product portfolio. to plants throughout all growth phases. CAN MOP standard and complies with UAN NPK increasingly stringent UAS environmental regulations. Urea granular Blends Urea prilled

IRON ORE NITROGEN INDUSTRIAL PRODUCTS PREMIUM PLANT NUTRITION* N N brands NP brands NK brands OTHERS Base organic Chemical industry Explosives chemistry Acetic acid Caustic soda High-density ammonium nitrate Vinyl acetate Halite (rock salt) * Highlight of key international brands. Excludes EuroChem regional brand portfolio. Butyl acetate Muriate of potash Low-density ammonium Methyl acetate Ammonia water nitrate Enhanced-efficiency fertilizers Complex fertilizers. Water-soluble Acetaldehyde All nutrients in one granule fertilizers Butanol Nitric acid

The pioneering SOP- and 8% MOP-based Water-soluble fertilizer A stabilised mineral homogeneous compound MOP-based complex NPK products for effective fertiliser for greater Higher urea performance fertilizer from EuroChem fertilizers from EuroChem fertigation and foliar 35% Wood processing Industrial gases Water treatment 22% nitrogen efficiency with urease inhibitor Antwerpen Nevinnomysskiy Azot feeding Melamine Argon Liquid chlorine SALES VOLUMES BY PRODUCT Methanol Carbon dioxide Sodium hyperchlorite 25.6MMT Urea grade A SELECTED BRAND VISUALS

9%

12% Road segment Oil industry 14% Calcium chloride Hydrochloric acid AdBlue®

MINING BY- FEED AQUALIS® CROPLEX® PRODUCTS PHOSPHATES The rising star in Adding value in the water-soluble products fertilizers segment P Iron ore Monocalcium phosphate Croplex® is a complex NP(S) Aluminium fluoride (MCP) granular fertilizer produced PHOSPHATES To drive further Baddeleyite Defluorinated feed development and unite at our Lifosa plant. phosphate (DFP) K the growing range of our This balanced nitrogen- water-soluble fertilizers, phosphate starter fertilizer for POTASH COMPLEX we introduced a new direct application is enriched global umbrella brand, with sulphur, zinc and boron, Aqualis®, for the line providing essential nutrients in late 2019 and rolled in one high-quality it out globally in 2020. homogeneous granule.

50 www.eurochemgroup.com EuroChem 2020 Annual Report and Accounts 51 Strategic Report Corporate Governance Financial Statements

OUR PRODUCT PORTFOLIO / CONTINUED Ensuring and Improving Fertilizer Efficiency Key areas of scientific activity:

Rising demand for food – coupled with shrinking arable PROVING AGRONOMICAL EFFICIENCY AND ECONOMICAL land per capita – challenges farmers to increase yields and VIABILITY OF OUR FERTILIZERS ACROSS THE WHOLE RANGE, quality. Furthermore, the increasing concerns about the 1 VARIOUS CROPS, CLIMATES AND SOILS preservation of biodiversity, groundwater quality and climate protection are compelling manufacturers to create high- >300 FIELD COVERING ENSURING AND efficiency products that reduce potential nutrient losses. TRIALS TOP CROPS IMPROVING PRODUCT conducted from commodity PERFORMANCE annually across crops like wheat from standard products At EuroChem, our R&D efforts are based on the premise SOME OF THE BENEFITS THAT OUR the globe. or rice to of doing more with less. Our premium fertilizers deliver like UAN, to advanced PRODUCTS PROVIDE specialty, cash solutions such as increasingly resource-efficient solutions, adapted to the crops like fruits. specific needs of farms, soils, and crops. We also invest in Our enhanced-efficiency fertilizers require fewer inhibited N fertilizers, next-generation technologies to make our products even applications to be effective, help improve crop yields and and new products more effective for our customers. quality, result in lower nutrient losses – and therefore offer in development. better returns across the product chain.

BETTER UNDERSTANDING EVIDENCE-BASED PLANT NUTRITION AND APPROACH EFFECTIVE FARMING Laboratory analysis, pot and field from the effects of different nutrient trials, soil and plant testing. forms or application time to residual and long-term effects in soil and plants.

Our complex NPK fertilizers contain all nutrients readily Our water-soluble products offer fertigation solutions for available in one granule, allowing a labour-saving intensively cultivated crops, saving water and limiting application and balanced crop nutrition. soil salinity. ANSWERING NEW CHALLENGES AND PREPARING FOR THE 2 FUTURE DEVELOPING NEW PRODUCTS UPGRADING EXISTING Chemical and biological inhibitors and SOLUTIONS phosphate or nitrogen boosters. by adding nutrients like sulphur, trace ENTEC® is our brand for fertilizers with nitrification Using UTEC® 46, urea with urease inhibitor, elements, improving liquid formulations.

inhibitors. With ENTEC® 26, the average reduction in N20 prompts an average yield increase of 6% and emissions is up to 72%, with an average yield increase of an NH3 reduction of up to 90%. 5% and an increase in nitrogen use efficiency of 12%. FOCUS TARGETS OF R&D AND ADVISORY

Safeguard existing and Adapt and develop Build up knowledge Training of and know- create additional value innovative solutions about future technical how transfer to regional by optimising (improving and product application developments in sales and advisory teams or modifying) products to to a changing market fertilizer environment, in order to facilitate better satisfy changing environment and e.g. precision farming, proper agronomical crop/agronomic needs. progress in crop farming biological nitrogen and value positioning and crop management fixation etc. of our products. Stabilised nitrogen-containing products such as ENTEC® and UTEC® systems. decrease ammonia and greenhouse gas emissions and nutrient losses to a large extent and support climate and environment protection.

“Leading companies focus their R&D investments on innovations that drive fundamental improvements to farmers’ economics. They also develop integrated offerings that make it easier for farmers to choose the right combination of products and services.” BOSTON CONSULTING GROUP Source: Programm zur Reduktion von Lachgas-Emissionen in der Schweizer Landschaft – Ammonium-stabilisierter Mineraldunger ENTECR26, Ernst Basler + Partner (EBP), 8702 Zollikon.

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FINANCIAL REVIEW

In 2020, despite the COVID-19 pandemic, EuroChem posted record earnings and reduced its net leverage ratio in line with expectations, enabling us to press ahead with our growth ambitions. Our vertically integrated business model, greater self-sufficiency in key raw materials and flexible operational approach helped us to overcome one of the more challenging years in recent history. KEY RESULTS In 2020, we generated revenues of US$6.2 billion on sales volumes of 25.6 million metric tonnes (MMT). This helped to achieve EBITDA of US$1.8 billion, up 17% year-on-year and a record, despite the challenging external KUZMA MARCHUK conditions and lower average prices for CHIEF FINANCIAL OFFICER fertilizers. The key contributors were greater production volumes, stronger prices for iron ore concentrate and a lower rouble cost base amid favourable exchange rates. The EBITDA margin rose by 4 percentage points to 29%, driven chiefly by an increase in potash output In 2020, despite significant market from EuroChem Usolskiy. In the reporting period, the Group turbulence, EuroChem reported generated cash flow from operating record EBITDA and a higher margin, activities of US$1.6 billion, up 31% year-on-year, with free cash flow while continuing to optimise its amounting to US$86 million. This position allows us to fund new growth debt position and ensure sufficient projects in-house. We increased capital liquidity. This leaves us well expenditure by 23% year-on-year to US$1.2 billion mainly due to finance positioned to fulfil our growth projects including EuroChem objectives in 2021 and beyond. Northwest 2. The new facility has an annual design AMMONIA PRODUCTION POTASH PRODUCTION capacity of 1.4 MMT/a of urea and 1.0 (EUROCHEM NORTHWEST 1) (EUROCHEM USOLSKIY) Integrated rail infrastructure enables MMT/a of ammonia. Most of the ammonia EuroChem to ship MOP produced at produced will be used internally, with Usolskiy to destinations worldwide. around 300 KMT to be sold to 994KMT 2.2MMT the markets. +26% +100% 2020 was the first full year of operations for ECNW 1.

SALES VOLUMES EBITDA OPERATING CASH FLOW DELIVERING 25.6MMT US$1.8BN US$1.6BN +8% +17% +31% 2020 25.6 2020 1.8 2020 1.6 RECORD 2019 23.6 2019 1.5 2019 1.2 RESULTS 2018 22.0 2018 1.5 2018 1.0

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FINANCIAL REVIEW / CONTINUED

SALES In the second half of the year, benchmark From the beginning of the third quarter, global ammonia prices recovered phosphate prices began to increase DEBT MATURITY PROFILE In 2020, the Group reported overall sales gradually, partly due to production issues strongly across all markets, soaring by volumes of 25.6 MMT, of which fertilizers Total debt (US$ million) as of Dec 31, 2020 in Indonesia and reduced output in 15-25% globally and 40% in the US. accounted for 70%. Fertilizer volumes In 2020 we reduced our Trinidad. Further support came from The main driver was a global deficit due increased by 12% year-on-year amid a rise in US industrial demand, together to import demand from India and Brazil, net leverage ratio to the production increases at EuroChem 2021 1,475 with limited supply in the West and constrained exports from China and Usolskiy and EuroChem Northwest, both ongoing buyer unease. production issues in Tunisia, Egypt and management target, 2022 906 Syndicated facility of which reached full operating capacity Bilateral loans South Africa. The US duties introduced in 2020. Sales were also supported by Urea prices also climbed in the second which underscores our 2023 1,011 Eurobonds caused further shifts in global trade Rouble bonds a rise in third-party product sales. half of 2020, driven partly by strong Project Finance patterns, widening the spread between stable capital structure 2024 1,086 demand in India and China. Additional Overall revenues of US$6.2 billion US and global phosphate prices. momentum came from stronger demand >=2025 966 remained flat year-on-year, mainly due to and sound liquidity in Europe, as well as seasonal increases POTASH softer fertilizer prices. However, mining in the US and Brazil. Potash sales doubled in 2020, reaching position. segment sales improved by 36% in value Undrawn facilities (US$ million) a new high of 2.2 MMT. Potash is a 2% 4% terms amid high iron ore concentrate In December 2020, granular urea prices growing contributor to the Group’s top 13% 47% 16% 18% 3,501 prices, despite an increase in volumes were US$30 per tonne higher than those line, as production from development of just 2%. in January. This rise was supported by projects gradually ramps up. RUB bonds registered programme Committed revolving line Cash and deposits such factors as a stronger grain-to- Uncommitted revolving lines Committed shareholder facility Term loans While the performance of benchmark fertilizer ratio, higher energy costs, as At the end of 2020, the global potash prices was mixed across the various well as reduced production and exports market returned to a more balanced fertilizer segments and iron ore, a from China. position, helping to keep prices stable pronounced upward market trend DEBT PORTFOLIO in Europe, Latin America and Southeast NET DEBT / LTM EBITDA DYNAMICS emerged late in 2020. Supporting this PHOSPHATES In 2020, net covenant debt increased Asia. Meanwhile, short-term supply ongoing recovery are a better supply- Group sales of phosphates and complex by 2% year-on-year to US$4.3 billion. constraints and strong domestic US demand balance and the critical role fertilizers increased by 9% in volume This increase was predominantly due 3.5x demand contributed to a sharp recovery of fertilizers in ensuring food supply, terms, driven largely by NPKs and MAP. to the financing of the Fertilizantes Covenant level in benchmark NOLA prices. The latter 2.82x particularly during events like a pandemic. DAP sales volumes decreased by 16% Tocantins acquisition. As of 31 December climbed from US$190 per tonne at the 2.53x 2.5x after production was redirected to more 2020, the net leverage ratio stood at 2.29x NITROGEN beginning of the fourth quarter to Management profitable MAP markets. 2.53x, compared with 2.82x at the end target US$250 per tonne by the end of Nitrogen sales volumes rose by 3% of the previous year. year-on-year and accounted for 35% In November, following a petition in December. of total sales. The leading product late June requesting countervailing IRON ORE In the fourth quarter, EuroChem performers were CAN and UAN. duties against Russian and Moroccan received a new five-year, US$460 2018 2019 2020 Strong iron ore concentrate prices were Ammonia sales volumes doubled, producers, the US Department of million syndicated loan from a pool driven by greater volumes being sold representing a 6% share in the nitrogen Commerce imposed preliminary duties of international financial institutions. and redirected to the Asia Pacific region segment. This also contributed to the on phosphate fertilizers in November. The facility can be extended by up to in the second half of the year. This shift DEBT MIX overall performance of nitrogen fertilizers. In response, EuroChem reallocated its US$1 billion and will be used to refinance helped to offset lower sales volumes phosphate fertilizer flows, mostly in existing debt. in Russia. Unsecured syndicated facility/Bilateral favour of the Latin American market. 10% 48% 24% 17% In October, Fitch Ratings affirmed the loans/Rouble bonds/Eurobonds Sales volumes from EuroChem Group’s credit rating at ‘BB’, the Long-term/Short-term 71% 29% outlook ‘stable’. Fertilizantes Tocantins accounted Unsecured/Secured 99% for 12% of Group figures worldwide In November, Russia’s ACRA Ratings USD 100% in 2020. assigned MCC EuroChem a rating of ‘AA- (RU)’, with a ‘stable’ outlook. Float/Fixed 35% 65% The agency acknowledged the issuer’s Covenant/O-covenant 91% 9% strong business profile, geographical diversification, robust corporate governance and solid financial position. OUTLOOK The Group has a stable capital structure and sufficient liquidity to deliver organic Despite the very real challenges facing growth, invest in new projects and, all market participants in 2020, should the opportunity arise, take EuroChem has entered 2021 with sound advantage of new market opportunities. fundamentals in place amid signs of positive growth in key geographic and By having a prudent approach to debt product markets. and strong cash flows, the Group is positioned to make continued capital investment in new growth capacity, such as EuroChem Northwest 2. This in turn will help to achieve its ambition of reaching the top of the fertilizer industry.

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In October 2020, EuroChem’s helps me to understand why, when and How would you rate EuroChem’s What were EuroChem’s most heightened focus on health, safety how to implement certain measures. It is efforts to limit the spread of important healthcare initiatives and the environment (HSE) resulted vital to recognise the right tools to apply COVID-19? and programmes in 2020? in the hiring of Oleg Nikolaenko as the at each stage of an organisation’s HSE Group’s new Head of HSE. Intimately cultural development: what might be While COVID-19 presented a Naturally, our COVID-19 knowledgeable on Russian, European beneficial in one instance can have huge challenge, I believe that response became the key focus and global best practice, as well as long-term implications if introduced in EuroChem’s professional and of our healthcare programmes the ever-evolving legal and regulatory the wrong circumstances. systematic response was and in 2020, and this will remain the climate, Oleg has a formidable continues to be successful. We kept our case for the foreseeable future. That reputation in occupational health operations running safely, prevented said, all of our regular ongoing and safety, with more than 30 years’ What are your initial major outbreaks and helped people in programmes remain in place, including experience of leading HSE teams impressions from 2020? need. We also demonstrated a solid HSE medical check-ups, vaccinations and at some of Russia’s largest performance in 2020, despite being healthy lifestyle initiatives such as sports seriously affected by COVID limitations. camps. We are committed to maintaining industrial organisations. Joining a dynamic and complex our progress regarding employee organisation at such a turbulent healthcare amid the pandemic. Recently, What brought you Please discuss any workplace time presented certain inherent we also began to focus on a COVID-19 to EuroChem? incidents that took place in challenges. However, thanks to vaccination campaign, as prevention is 2020, as well as how EuroChem the collective efforts of my colleagues in key to ending the pandemic. intends to prevent such HSE, in HR and across the Management OLEG NIKOLAENKO At EuroChem, I have the occurrences in the future. Board, I have hit the ground running and HEAD OF HSE opportunity to truly make my What will your primary look forward to new successes in 2021. mark. The challenges here chime In 2020, we had two fatalities. focus be in 2021? with my strongest skills: taking a Thorough root-cause analyses tried and tested improvement algorithm of the circumstances revealed and adapting it to the specifics of an How has the pandemic several contributing factors My overarching goal is to drive organisation like the Group. The work impacted the scope of including poor planning and risk HSE performance to new heights, done at EuroChem over the last year your role? management. We view any fatality as helping our Company to become has provided the perfect foundations unacceptable and will never rest in our As a vertically integrated company Clearly, the past year was the safest place to work in the on which to build the kind of robust and pursuit of instilling a safety-first culture dominated by the need to industry. An important aspect of our HSE responsible safety culture that we need that prioritises personal responsibility. with activities spanning mining protect our colleagues, their efforts in the coming year, in a single to make this an even healthier, safer and We additionally recorded several families and our wider word, is transparency. We need a deep to production and worldwide more rewarding place to work. incidents involving electricity, such as communities all over the world from the understanding of everything happening arc burns and electric shocks. For each pandemic’s effects. In terms of my role, at our facilities. This will help us to take distribution, we recognise our of these, we conducted a thorough this extended to helping to ensure the next step, which is to learn the How has your previous investigation. Overall, we found that responsibility to develop and business continuity safely, in the face of underlying reason for every incident at experience prepared you the direct causes were mostly related to the challenges and restrictions presented our operations. To improve our ability to implement a clear and consistent HSE for the role? human error. We sought to address this by the virus. Fertilizers are critical to do so, we are working to deliver a more immediately to prevent recurrences When I started my HSE career, underpinning global food supply, so we effective ‘lessons learned’ mechanism. framework that applies to all people using initiatives that are known to be we were devising or improving have a duty to uphold production. In the meantime, we will also implement effective in such cases. These included and locations, making EuroChem many initiatives that have since However, there is no production facility many other initiatives, particularly to implementing a lock-out, tag-out (LOTO) become best practice or rule of so important and no delivery so urgent improve our HSE training. In addition, a safer and more rewarding place programme, ensuring that everyone has thumb. Perhaps the greatest factor that that we would put our colleagues’ safety we are rolling out a programme that aims proper mandated PPE and requiring strict will help in this role is the combination on the line to meet our financial goals. to foster HSE leadership, so that we can to work, while fulfilling our role as adherence to the permit-to-work system. of my intimate theoretical knowledge and EuroChem is starting to become firmly embed a culture of personal These initiatives began in 2020 and will a good corporate citizen. first-hand personal experience, which synonymous with safety, and my job is to responsibility regarding occupational continue further. cement that association once and for all. and process safety.

COVID-19 RESPONSE TIMELINE Protecting our people at all cost

Global working group Sent global alert Heightened monitoring created to implement to all employees of infection rates and DRIVING coordinated response on precautions use of PPE

FEBRUARY MARCH APRIL MAY/JUNE JULY/SEPTEMBER OCTOBER/DECEMBER

HSE TO Emergency response Sourcing of Comprehensive measures Limited Regular testing for Resource- Vaccine centre in Russia required PPE imposed across all office employees introduced allocation requests established and moving enterprises in Russia/CIS, operations and reviewed analysis submitted to Daily monitoring of employees to with many implemented at resumed Additional occupational conducted in authorities infection rates introduced remote working global level safety audits conducted every area of NEW HEIGHTS operations

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SUSTAINABILITY REVIEW / CONTINUED Using Finite Resources Sustainably Sustainability strategy in action Farmers must feed growing global populations EuroChem’s sustainability efforts span all aspects by making ever more efficient use of finite land of its operations, including stewardship of natural, resources. To help them to do this, EuroChem human and economic resources; continuous provides fertilizer products that are innovative, improvement of production technology; safety; effective and environmentally responsible. supplier relationships; and engagement with stakeholders and regulators.

Priority areas Strategic goals and activities Performance management Continuous improvement • Helped farmers to achieve more for less: to • Launched a major environmental project at grow more food for more people, minimise EuroChem Usolskiy to safely store excess environmental impact and use less land potash brines underground ENVIRONMENTAL and other finite resources • Incorporated best available technologies (BAT) STEWARDSHIP • Promoted our UTEC® and ENTEC® inhibited during the engineering and design phase fertilizers and continued our R&D programme of new facilities to ensure environmental to develop new products with less good practice environmental impact • Considered all available means of minimising • Ensured compliance with all relevant environmental impact when evaluating legislation at all sites, including new potential new investment projects environmental regulations

Sustainable agriculture Financial prudence • Continued to focus on R&D for our portfolio • Continued to invest in future growth while of inhibited products developing effective products that support • Leveraged our global distribution system better yields and financial performance ECONOMIC to improve efficiency and reduce for farmers SUSTAINABILITY environmental impact Customer excellence • Engaged with farmers to ensure ongoing • Continued to deliver high-quality variants satisfaction and continuous service of the three primary nutrients that meet improvement growing customer demand for reduced SOCIAL ENVIRONMENTAL Innovation environmental impact • Invested in BAT and developing the next Supplier relations RESPONSIBILITY STEWARDSHIP generation of premium fertilizers with lower • Worked to sustain the best possible standards environmental impact at every point of our value chain • Continued to focus on vertical integration with • Collaborated and delivered value to support the aim of improving operations throughout strong relationships that benefit everybody the value chain

Workplace safety Government relations • Continued to emphasise safety in the • Worked closely with regional and central workplace as our most important governments to ensure cooperation on strategic focus supporting the environment SOCIAL • Implemented numerous safety-related • Undertook systematic work with local RESPONSIBILITY ECONOMIC programmes as part of our Project authorities close to our operations to help them Zero membership to attract state funding SUSTAINABILITY • Launched the InSight digital safety platform Local communities to foster a lasting safety culture and reduce • Expanded our community investment portfolio, the risk of workplace injuries contributing US$5.5 million to projects at all Recruitment, motivation and retention regional locations • Ran programmes with Russian and international • Constructed or opened new community schools and universities to continue attracting facilities in Nevinnomyssk and Kingisepp talented young STEM students (children’s technopark Quantorium), and • Delivered 1,219,558 man-hours of on-the-job Novomoskovsk (Sozvezdie educational centre) training as well as secondments, coaching • Funded educational, environmental and cultural and other programmes to build knowledge projects across many towns and skills • Supported major promotional projects to give • Provided access to more than 950 online cities clear and attractive tourism identities training courses promoting soft skills • Focused on internal career opportunities to help employees grow and develop within EuroChem

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APPROACH fertilizer produced. As a result of a legislation, including recent changed product mix there was a slight developments like the EU’s new rules The Group’s HSE team comprises rise in 2020. on controlling cadmium levels in Environmental more than 190 specialists, including phosphate fertilizers. We understand that healthy professionals with expertise in New capacities in forthcoming years, communities need clean air engineering and policy. They work in such as our new EuroChem Northwest 2 As part of our continuous efforts to accordance with a policy framework that ammonia and urea plant in Kingisepp, improve our environmental stewardship, Stewardship and water, as well as pleasant establishes our expectations for all will include carbon-abatement facilities we review how each new investment managers and employees. These designed to reduce our environmental project can incorporate the latest green spaces in which to guidelines govern how we reduce impact. EuroChem Northwest 2 will use environmental management processes. environmental impact, including through the CO byproduct from the adjacent These include recycling wastewater, thrive. Throughout the year, 2 the sustainable use of natural resources, EuroChem Northwest 1 plant in its own re-using excavation waste and capturing At EuroChem, accountability for our people continued to continuous HSE improvement and production cycle. CO2 as a by-product for sale to meeting environmental management associated targets. This forms the core other industries. lead by example in making of our systematic approach to addressing Our ongoing commitment to international targets cascades from the CEO to the environmental concerns. best practice includes applying best meaningful environmental available technologies (BAT) and ISO head of Head of Health, Safety and We have a strong commitment to 14001 environmental management Environment (HSE), Group executives contributions to the cities sustainability, and we are working hard systems. We comply with all aspects of and senior managers at each facility. where they work and live. to reduce our emissions per tonne of national and international environmental The HSE department and its on-site personnel help them to perform day‑to‑day supervision. OLEG NIKOLAENKO HEAD OF HSE

NON-RECYCLED WATER AIR EMISSIONS CONSUMPTION ENVIRONMENTAL -5% +9% ACTIVITY IN 2020 (m3 per tonne of production) (kg/tonne) 1.0 2.2 2.2 EuroChem Usolskiy launched a major environmental 2.1 0.9 project that aims to utilise excess potash brines and 0.8 store them safely underground. Igor Nechaev, Chairman of the Board of Directors of MCC EuroChem, and 76.3 72.1 73.0 35.8 Young Specialists from EuroChem VolgaKaliy Igor Baranov, Chairman of Tula’s “Environmental Protection” public 29.9 conducted an environmental awareness programme organisation, signed an agreement outlining an environmental action plan 27.1 Kovdorskiy GOK’s workshops competed in “The Cleanest called “Care For This Planet!” for nursery school Shop”, an environmental project encouraging the separate for Tula region in 2021. It is part of an initiative of Russia’s president, children. collection and disposal of waste. As part of the programme, Vladimir Putin, and the region’s governor, Alexey Dyumin, to promote Nevinnomysskiy Azot received a letter of appreciation the plant purchased and installed 600 separate waste environmental projects in the region. 2018 2019 2020 2018 2019 2020 from Russia’s Federal Service for Environmental, containers in its workshops, organised a central warehouse In the cities of Kotelnikovo, Novomoskovsk, Belorechensk and Kingisepp, Water consumption, Air emissions, kg per tonne Technological and Nuclear Supervision in recognition and concluded contracts for transferring waste for disposal Young Specialists and other volunteers from EuroChem facilities helped to m3 per tonne of production of production of its high level of professionalism and significant and recycling. The competition resulted in 2 tonnes of paper, make their local communities greener and healthier by planting more than Water consumption, Air emissions, total contribution to environmental and industrial safety. cardboard, plastic and glass being transferred for processing. 400 juniper and maple seedlings. total million m3 thousand tonnes

EFFLUENT ENERGY CONSUMPTION MARCH APRIL MAY JUNE JULY SEPTEMBER NOVEMBER

Novomoskovsk hosted the “ECO Generation” children’s -7% -1% environmental competition (m3 per tonne) (kWh per tonne) involving schoolchildren from eight city schools. It covered several important 2.0 1.9 1.9 111.3 114.4 112.9 environmental topics, including developing public transport, fighting dust and dirt, and addressing the 67.6 69.3 4,171 Young Specialists from EuroChem-BMU took part in a 62.2 3,677 3,854 tree-planting campaign called “Plant a Tree – Do a Good Kovdorskiy GOK’s ecologists released problems caused by the Deed” in preparation for the celebration of the 75th 67,000 salmon fry into the Umba River, rising use of personal anniversary of the victory in World War II. As part of the upholding biodiversity in a crucial vehicles in the city. The campaign, they landscaped an alley in Belorechensk’s water body. winners of the competition 2018 2019 2020 went on an ecological tour 2018 2019 2020 Victory Park with students from Belorechensk Industrial Kovdorskiy GOK helped the city of Kovdor For World Cleanup Day, Young Specialists from Kovdorskiy GOK and Technological College and volunteers from the of Kaliningrad region. Euent, m3 per tonne Energy consumption, to dispose of mercury-containing waste joined forces with students from local high schools to clean up of production kWh per tonne of production Ecological Commonwealth organisation. and recycle 50,000 mercury lamps the city’s lake shore. Together, they collected and disposed of Euent, total million m3 Energy consumption, weighing 18 tonnes overall. more than 1 tonne of rubbish. total million kWh

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PERFORMANCE The fertilizer industry has developed and prioritised the notion of product and WATER USE Our production processes consume nutrient stewardship: setting standards large volumes of water from surface for the environmental footprint of and underground sources. We follow individual products and optimising international best practice by investing their use to minimise impact. We take in water conservation and efficiency a targeted environmental approach to measures throughout our operations. this challenge, including enhanced water Russia’s Ministry of Natural Resources and energy efficiency and the design and Environmental Protection recognises and manufacture of advanced fertilizer products. By this, we mean products that We follow international best our Clean Water Programme as an practice by investing in water industry-leading initiative. At six of our reduce NO₂ emissions and nitrate run-off when fertilizers are applied. conservation and efficiency plants in Russia, the programme uses measures throughout our state-of-the-art conservation and By providing farmers with fertilizers that operations. treatment technologies to reduce are more effective and environmentally water consumption. sensitive, we strive to give them the Our R&D operations ensure our flexibility to produce more food from the AIR EMISSIONS product portfolio is equipped with land resources available. We help them Extracting mineral resources, the latest inhibitor technology to to meet this need by continuously manufacturing products and distributing minimise the impact of fertilizers on iterating in our search for the next them to customers invariably generates the environment. various atmospheric emissions, including breakthrough in crop nutrient solutions. sulphur oxides, carbon monoxide, nitrogen oxides, ammonia, particulates and hydrocarbons. We continuously monitor air quality around our production facilities, sharing data with regulatory authorities and local communities. A small increase in emissions due to new production in 2020 will quickly be mitigated through a range of abatement initiatives. As part of our contribution to the industry’s efforts to fight climate change, we constantly seek new innovations that we can implement throughout our business to improve energy efficiency and reduce greenhouse gas (GHG) emissions. WASTE AND EFFLUENT Our operations generate a range of inert wastes. In particular, manufacturing fertilizers results in large volumes of two by-products: phosphogypsum from phosphate fertilizer production, and overburden and concentration tailings from mining operations. We strive to minimise any environmental impact arising from the storage and/or disposal of both. PRODUCT STEWARDSHIP We understand that our operations and industry play important roles in abiding by the requirements of the Paris Agreement on Climate Change. This is more than just an impetus to improve energy efficiency: it is our responsibility to market products and provide information that helps farmers to meet yield targets while keeping their use of fertilizers within safe and appropriate limits. We recognise and accept this challenge.

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CUSTOMER NEEDS Coupled with the enhanced efficiency We are not self-sufficient in several raw and outstanding quality of our products, materials, including the apatite that we Around the world, there are only three as well as our deep understanding of use to produce phosphate fertilizers. Economic companies that can produce all three farmers’ needs, these factors help our While we source around 30% of our primary nutrient groups in-house, and customers to recognise the full value requirements from external parties, EuroChem is one of them. This makes embedded in the prices of our specialty in 2020, we became increasingly it simpler and more cost-effective for us Sustainability fertilizers over commodity ones. self-sufficient in raw materials used to supply our products than for most to produce NPK fertilizers, including competitors. Farmers in regions like ammonia and potash. North America, Europe and Latin America SUPPLIER RELATIONSHIPS also have increasingly sophisticated In ensuring full supply chain requirements and place a high value responsibility, we strive to abide by the At EuroChem, we understand the on our premium product offerings. best possible standards of behaviour, including in our dealings with suppliers This growing sophistication is partly due importance of ensuring that our of raw materials and other products and to the approach that farmers have begun products are not only environmentally services. For goods that we must buy to adopt concerning environmental best externally, we work strictly with reliable friendlier, but also more economically practice. The evolving nature of their producers and suppliers who can source business enables them to understand efficient, as the two are inextricably the highest-quality ingredients. that the economies that we deliver also linked. We do this by liaising closely help them to reduce emissions during with the farmers who use our fertilizers, transportation. We do this by delivering We fine-tune our new products with a test group of customers to ensure which also reinforces the bond with a fertilizers from all primary nutrient groups on a single vessel and to a single port, peak performance before releasing key stakeholder group. unlike mono-producers. them to the broader market.

EARTH-FRIENDLY FARMING TECHNOLOGICAL FINANCIAL STABILITY AND We engineer our highly efficient next- INNOVATION SHAREHOLDER RETURNS generation fertilizers to significantly Understanding the importance of the Another important aspect of our business reduce their environmental impact, rapid technological advancements taking is ensuring that we generate funds to understanding our products’ role in place around the world, we are also invest in future growth, deliver strong helping farmers to continue feeding the developing our own digital offerings for returns to our shareholders and improve world’s expanding population in a more customers. In doing so, we seek to crop yields. earth-friendly manner. This approach empower farmers to increase the We understand that the current structure makes EuroChem an important player efficiency of their operations using of the global agricultural sector creates in the drive to produce food sustainably precise fertilizer delivery methods that an inherent environmental impact. and on a global scale. We understand enable them to achieve specific We work constantly to identify and that as our business grows, so will the yield targets. importance of our role in this process. implement advanced technological Our drive for technological innovation solutions that can help us to reduce Continuously innovating and improving is focused on those areas where we all aspects of this, including extracting our product range is not enough. We also believe that we can bring a material and sourcing materials, making and need a distribution platform with the benefit for our customers. This includes distributing our products, as well as our scale to deliver our fertilizers to farmers applying BAT in all new production ongoing dialogue with farmers and worldwide easily and efficiently. processes, as well as striving to other stakeholders. Our presence in all major agricultural constantly improve the efficiency of our We also strive to remain on the cutting regions provides us with an intimate premium products, such as targeted edge of market shifts, changes in understanding of the land, soils and fertilizers that take into account the consumer habits (such as meat- individual nutrient requirements in specific nutrient needs of each individual consumption patterns) and new science- all of them. piece of land. These include inhibited based solutions that offer us chances to or enhanced-efficiency fertilizers (EEFs), We also know the farmers who have reduce our environmental impact further. which can control nutrient release. been working the land for generations We believe that this forward-looking Our UTEC® and ENTEC® products are and understand their needs. We work approach will help us to remain a advanced examples of these. closely with them from season to season, successful and relevant business ensuring that we are able to continue In addition, we fine-tune our new regardless of the changes that lie ahead. meeting their evolving requirements, products with a test group of customers including by providing innovative new to ensure peak performance before products and services, as well as releasing them to the broader market. advising them on fertilizer application. We also offer guidance on the product mix to allow them to employ more environmentally friendly practices while potentially improving crop yields.

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SAFETY PERFORMANCE We rolled out safe driving training for all As a part of our ongoing hazard our drivers. At EuroChem Usolskiy and identification process, local management In 2020, in our ongoing drive to reduce sites in the Fertilizers Division, we are and HSE personnel are required to Social the injury rate across the Group, we upgrading the fatigue control system for conduct safety walks that follow a made significant further investments in drivers of mine vehicles and other heavy standard procedure and specific personal protection equipment, training mobile equipment. In addition, we are checklist depending on the risks and assessment, medical examinations, Responsibility installing a collision prevention system identified for the site. compliance checks and more. for the mining fleet at Kovdorskiy GOK. We have also worked to further We launched numerous safety-related As a way of controlling hazards when strengthen our safety culture by initiatives during the year. We began working on energised equipment, we designing a visual profile for safety- conducting root-cause analysis (RCA) implemented lock-out, tag-out (LOTO) related communication. It aims to training for key positions in HSE and procedures for all 110 kV and 35 kV promote pride in behaving responsibly One cornerstone of our social production, which more than 100 electrical installations in 2020. We will by portraying people working safely as people underwent. responsibility is safety, which is also our continue rolling out this programme to heroes. overriding priority, as the wellbeing of At EuroChem Usolskiy, we launched cover all electrical equipment. a pilot project with HSE dashboards FOR MORE INFORMATION ABOUT THE our people and local communities is To improve the quality of our reporting, INSIGHT PLATFORM, SEE OUR CASE showing real-time statistics, including the STUDY ON PAGE 10 we introduced the InSight platform. This paramount. To drive progress in this safety pyramid, number of HSE audits user-friendly IT system simplifies and other leading safety KPIs. We also area, EuroChem has set a target of reporting while systemising it for analysis started to pilot an expanded version of through the use of a smartphone becoming the industry’s leading name our Idea Factory initiative to include application. Through InSight, our plan is for safety by 2025. safety initiatives at the facility. to not only capture incidents, but also empower front-line employees to report hazardous conditions. Reporting goes directly to Group-level HSE colleagues. SAFETY: OUR NUMBER A more transparent reporting culture The six main risks in our operations at EuroChem is already reflected in the concern working: ONE PRIORITY number of reported incidents for 2020. Our goal is to instil a consequence-free ――at height; A key objective of the Company is to APPROACH reporting environment, with frictionless ensure Health and Safety guidelines ――with safety protected machinery are followed as a matter of personal EuroChem’s ambition is to become communications from site to management, and equipment; the safest, most value-accretive and and we are using a number of tools and responsibility. fastest-growing company in the mechanisms to achieve it. ――with hazardous chemicals; fertilizer industry. At EuroChem, attention to safety ――with energised equipment; Our number one priority is to improve cascades from the Board of Directors, ――in confined spaces; occupational and process safety. its newly formed HSE Committee, and At EuroChem, we care – about our the CEO. While we have taken the most ――under the influence of drugs colleagues and ourselves, families immediate improvement actions, we or alcohol. and friends, environment, assets and need to formulate our long-term HSE machinery. We will improve our strategy, measure progress and cement occupational and process safety in the continuous improvement system lockstep with productivity. We are also to reduce risk and enhance committed to reducing our environmental business performance. footprint, increasing the sustainability of our operations and acting responsibly towards our communities. To accelerate progress, we have set a target to become the company with the industry’s best occupational and process safety performance by 2025, as measured by the Total Recordable Incidents (TRI).

LOST-TIME INJURY FREQUENCY FATAL ACCIDENTS LOST-TIME INCIDENTS RATE 2020 1.48 2020 2 2020 81 2019 0.78 2019 3 2019 53 2018 0.89 2018 2 2018 56

Note: The rise in safety incidents in 2020 is primarily attributable to improved reporting practices across the Group.

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The HSE department has stepped up its efforts to monitor and guide compliance with workplace safety and hygiene rules. In addition, our pandemic response strategy draws on the experience of colleagues in other countries, who are always ready to help. Our team was among the first to solve the problem of providing masks for employees, overcoming the challenging situation in our region. Today, masks are mandatory for everyone at our facilities. It is also important to support medical professionals, understanding that they are on the front lines of the fight against COVID-19. We continue to work with regional hospitals and help our doctors to fight this illness.

SVETLANA KOMAROVA SERIK BULEGENOV PROCUREMENT DIRECTOR AT HEAD OF HSE DEPARTMENT AT EUROCHEM USOLSKIY, RUSSIA EUROCHEM FERTILIZERS, KAZAKHSTAN

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Since the pandemic began in Brazil in March 2020, EuroChem Fertilizantes Tocantins has been following robust prevention protocols. These include supplying masks, sanitisers and cleaning products; ensuring physical distancing; and conducting mass testing. Nevertheless, The biggest challenge for us in we have tragically lost some sales is finding new customers colleagues to the virus. amid social distancing. We express our profound The pandemic has caused us sorrow to their families and to rethink some of our work redouble our efforts to adopt approaches, taking into the most stringent measures account health. One practical required to protect our people. example is closing a deal, which is now done using digital signatures instead of ones on paper, making the process more streamlined.

ANDRESSA GOMES LIMA CELSO KATSUMATA JUNIOR INTERNAL SALES HEALTH AND SAFETY MANAGER AT AT EUROCHEM FERTILIZANTES EUROCHEM FERTILIZANTES TOCANTINS, TOCANTINS, BRAZIL BRAZIL

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It is extremely fulfilling to work for the good of humankind.

Everything going on around me is much larger than

I initially imagined. IVAN KSYKIN MICHAEL BERNWALD CHIEF SPECIALIST FOR AGROCHEMICAL SERVICES IN THE MARKETING DEPARTMENT AT EUROCHEM TRADING RUS IN KRASNODAR, RUSSIA LEAD MECHANICAL SPECIALIST AT EUROCHEM FERTILIZERS, KAZAKHSTAN EuroChem is well known in the market and has a My objective at EuroChem is to play an good reputation among the farmers with whom I active role in the design and construction have worked. During my time on the job, I have of a new chemical facility in Zhanatas. In grown professionally as a specialist, developing an the future, I aim to move to a managerial understanding of fertilizers and their effect on plants. position at the new facility. The Group has This has helped me to pass on my knowledge at had a highly positive effect on my life. seminars and training sessions for farmers. After a year on the job, I understand that EuroChem has brought change for the better to my everything going on around me is much life. My family and I have moved to a warm, southern larger than I initially imagined, and I am region with a mild climate. The sea and mountains proud to be part of a team doing such a are both nearby, and we love to travel around the tremendous job. area where we live. When I tell my friends what I do, they say that it is great to work for the good of humankind, helping farmers to grow quality produce and achieve impressive yields with a variety of crops.

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PERFORMANCE EDUCATIONAL OUTREACH We have focused significant effort on We also launched pilot mentorship EMPLOYEE As of 31 December 2020, we employed As a growing organisation, we view improving our induction processes for projects and started to develop an MOTIVATION more than 27,000 people at the Group young people as catalysts for positive new employees. We also partner with internal coaching practice. The selection To achieve our strategic goal of level, as well as at our corporate offices change at EuroChem. More than 30% of specialist schools and colleges to train system helps to identify potential becoming the world’s largest and most and business units located in more than our employees are aged under 30, and our engineers and technical specialists. mentors, after which a special training successful fertilizer business, our team 40 countries. We comply with all relevant we see them as a key asset. and motivation programme fosters employment laws and codes on the In 2020, the first online League of Trades workplace mentors who can teach and needs the industry’s best-qualified, Educational links are therefore important rights of employees, including championship for trade school students transfer their knowledge to new hires highest-performing and most motivated to us, and we have strong working international conventions. We do not use who want to join EuroChem upon and students. people. Understanding this, we have relationships with secondary and tertiary forced, compulsory, child or agency graduation was held as part of the prioritised attracting and retaining top schools and colleges via our established labour, and we respect all human rights international CASE-IN engineering Given the inability to conduct face-to- talent at every level of our organisation. EuroChem students’ programme. This under the laws and conventions of the championships. More than 900 students face training during the pandemic, our attracts and supports new recruits APPROACH countries where we operate. took part in the contest, which established online training platform EuroChem’s human resources (HR) through a focus on science, technology, NATALIA YAMSHCHIKOVA challenged them to solve real-world became an invaluable asset in 2020. Our remuneration policy specifies engineering and mathematics (STEM) production problems. Students were able We doubled the number of courses function has overall responsibility for HEAD OF HR the Group’s HR strategy, objectives appropriate salary increases in line with education at Russian, European and to visit the Group’s production facilities available to employees to more than and policy, supported by managers global industry best practice. We base American universities, as well as in virtually and talk with our specialists. 950. They include bespoke courses salary levels on the industry norms where secondary schools and colleges in tailored to EuroChem’s needs, covering in divisions and business units. Key The sixth annual EuroChem Case Solving responsibilities include defining required we operate and by analysing Russia, Lithuania and Kazakhstan. such topics as compliance, risk international compensation data. Championships saw more than 650 management, health and safety, as well standards of behaviour; attracting the To improve the programme’s university students from 15 cities as cybersecurity. During the year, almost best talent, creating and delivering To continue working during the COVID-19 effectiveness and support the Group’s The uniqueness of participate. During this event, our expert 9,000 employees started distance comprehensive and effective training and pandemic, we had to move many HR sustainable development, we have judging panel assesses participants’ learning, collectively completing more development tools; and devising reward processes online, including recruiting. several other initiatives in place to every company lies in knowledge and skills, giving them a than 70,000 courses. and motivation systems to drive We continued to actively search for and generate an inflow of Young Specialists its employees. While better understanding of our business commitment and loyalty. hire employees in various regions, and provide the smooth transition and enabling them to make informed TALENT RETENTION It is important that we keep channels of countries and continents. For some of knowledge and skills from technology, processes career decisions. At EuroChem, we care about our people. communication between all levels of the positions, new colleagues jumped right older colleagues. One ongoing challenge is attracting into working remotely. We also moved to and methodology can TRAINING AND CAREER and retaining skilled and motivated organisation open and positive. This For example, we have a programme of conducting online interviews with all DEVELOPMENT professionals with the right technical, transparent environment helps to support corporate days, scholarships, summer We give all employees numerous categories of decision-makers, from line be created or brought managerial and interpersonal skills. an atmosphere of trust and encourages a apprenticeships and joint educational opportunities to improve their abilities managers to senior executives. Thanks to We hold various career development ‘speak-up’ culture where employees feel and research activities. We also work in, people and culture and experience. Our training function these efforts, around 3,500 people initiatives for those with ambition to be able to convey their concerns to hard to select and recruit the most helps them to refine skills for their joined the EuroChem team in 2020. cannot be copied. the best. One example is the High senior managers. talented students. We aim to hire 190 current jobs, qualify for roles in other Potential (HiPo) programme, which we students from nine partner universities parts of the business and progress to launched in 2018 to identify and support to join the EuroChem team in 2021. To make our business more senior positions. the growth of colleagues with high even more effective, We provide various on-the-job training development potential. Participants placements and secondments, coaching in the HiPo programme are split into we will strive to and other formal programmes that build national and international leagues. continuously improve knowledge, skills and abilities. We give The programme exposes participants qualified employees a clear route into to all of the Group’s business divisions, FULL-TIME EQUIVALENT GROUP SALES PER EMPLOYEE a management or professional career. developing their business acumen EMPLOYEES (US$/PERSON) PERSONNEL COSTS (US$M) our employees’ We provide support through continuous and leadership skills along the way 2020 27,924 2020 220,828 2020 624 professional abilities, learning and tuition and, in some through training modules at various instances, can make financial support EuroChem locations. Of the 1,907 2019 27,184 2019 2019 227,482 613 as the world is available. In 2020, we delivered 1,219,558 people who applied, we selected just 2018 26,376 2018 211,461 2018 581 changing rapidly man-hours of training. 40 to participate in this fast-track development programme. and demands are Our divisions revise their succession plans regarding our talent pool regularly. In the beginning of the year, before GENDER DIVERSITY PRODUCTIVITY PER MAIN TYPE OF AVERAGE FULL-TIME EQUIVALENT increasing constantly. Each year, the Group promotes high- the introduction of pandemic-related PRODUCT PER PERSON (TONNES) WAGE (US$/MONTH) performing people to key senior internal restrictions, we conducted several positions. For example, in 2020, we modules of the HiPo programme. 2020 2,204 2020 1,263 launched a project to create a talent pool In January, our facilities in Kingisepp, Russia, hosted lectures, workshops 2019 2,188 2019 at the main production sites in the Mining 1,268 and master classes for the HiPo 29% Division. Its primary goal is to support the 2018 2,189 2018 1,207 supply and, where necessary, the programme national league. In addition, replacement of key employees; build the international league participants a deeper bench of professionals; and attended a leading management school 71% ensure continuity while handing down in Antwerp, Belgium. Due to the Group-specific knowledge and skills. pandemic, the remaining blocks of the Male national and international leagues were Female postponed until 2021.

KEY HR INDICATORS 2018 2019 2020 Management to staff ratio (%) 13.3 13.6 14.1 Staff turnover at production facilities (%) 3.5 3.6 4.0

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We work hard to make every contribution GOVERNMENT COMMUNITY or commitment directly relevant to the RELATIONS OUTREACH individual needs of each community. Young Specialists Meeting Our focus continues to be on practical OUR APPROACH OVERSIGHT areas like master-planning, city We run one of Russia’s leading corporate ‘Young Specialists’ programmes, which Engaging with our stakeholders in Our Board oversees all investments that improvement, healthcare and education includes an incentives package, personal development plans, mentoring, training government is both a driver and an we make in projects and infrastructure infrastructure, cultural development and programmes and the chance to participate in scientific and technical conferences. outcome of our sustainability strategy. close to our sites. Our corporate and sports. This approach informed our EuroChem’s annual gathering of its brightest and best young talent — the Young It enables us to build a picture of the plant management teams, who know and efforts to stop the spread of COVID-19 Specialists Meeting — had an unfamiliar look this year, as the pandemic necessitated concerns and opinions of those who understand local communities well, guide in 2020. a move to an online format. Despite the circumstances, the event was deemed a interact with us. these decisions based on their major success, with more than 120 participants from Brazil, Kazakhstan, Lithuania understanding of local needs. This engagement is vital for a company PERFORMANCE and Russia taking part. In 2020, we continued to expand with large-scale, long-life assets such This is particularly important in more our community investment portfolio, The 14th Young Specialists Meeting brought together the finalists of the Science and as EuroChem. We meet regularly with remote regions, where our plants contributing US$5.5 million to projects Technology Conference. Year after year, the scientific research and development national government figures in the are often major local employers and across all locations in Russia. Our overall conducted by our Young Specialists is more meaningful and far-reaching. The first countries where we operate, and attend contributors to regional economies. aim is to help the cities where we work prize went to Anton Pashchenko and Kirill Gromtsev, who focused on backfilling international trade fairs, exhibitions and We normally co-create and co-finance by developing facilities that will attract mined areas of potash deposits. conferences. We stage open days for our investments in partnership with local funding, from both EuroChem and local government officials, regulators and government or non-governmental government, including at the other stakeholders to tour our facilities organisations (NGOs). national level. and gain a better understanding of We believe that we have a strong what we do and how. We take part in responsibility to our local communities. regular discussions with local authorities Our business benefits when these to build mutually beneficial dialogues communities are healthy, stable and on issues of common concern, sustainable, with a direct positive impact including the environment and on our employees’ performance at work. sustainable stewardship. We see ourselves as an active part of our Our systematic approach ensures that we communities, connecting local authorities are adequately informed about the and encouraging people to set up concerns of lawmakers and regulators, and participate in local, regional and enabling us to foresee and respond in a federal programmes. timely manner. Events such as the EuroChem- FOR DETAILED INFORMATION ABOUT sponsored football competition in OUR PROACTIVE APPROACH TO COVID-19, Kazakhstan encourage healthy SEE PAGE 3 living in our communities.

1st place: 1st place: ANTON PASHCHENKO KIRILL GROMTSEV EUROCHEM VOLGAKALIY EUROCHEM-PROJECT

Project: Implementation of paste Project: The role of backfilling in mined thickening for rational tailings areas at Gremyachinskiy GOK management at Gremyachinskiy GOK “Our work overlaps in the field “This is the culmination of eight of backfilling, as well as in the months of studying a vast amount environmental safety of subsoil use, of information, technology and which is relevant to the Group’s work. equipment, as well as countless The results of my research show that evenings and weekends spent on backfilling mined spaces not only calculations. This is an actual solution, disposes of production waste, but also with real numbers, equipment and has a strengthening effect on the technology. We plan to implement the pillars. When developing calculation project in 2020-24. At the moment, we methods in the regulatory and are planning to take live samples of technical documentation, this can products from the existing plant, and increase the recovery factor while once again conduct research on them. maintaining safe conditions for mining A tremendous amount of work has under the surface.” been done. The solution found will be implemented to deliver tangible investment savings, reduce environmental risks and possibly add years to the mine’s operation.”

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Russia’s Civic Chamber recognised the volunteer activities of EuroChem’s employees during the pandemic as one of the best social practices in the country. CLEAN WATER AND SANITATION REDUCED INEQUALITIES CLIMATE ACTION LIFE ON LAND The Group received a certificate of The production facilities at EuroChem EuroChem’s Principles of Corporate EuroChem monitors its carbon footprint Igor Nechaev, Chairman of the Board of appreciation signed by Russian President Northwest 1 operate in a closed-loop Ethics include the following and is introducing new energy-efficient Directors of MCC EuroChem, has called Vladimir Putin for its contributions to the water cycle, enabling the reuse of water requirements: technologies to reduce both direct and for the active planting of trees with the national mutual assistance campaign in the production process without indirect greenhouse gas emissions. “highest absorption capacity” in the #WeAreTogether. Corporate governance: providing an effluents. The system utilises more than • country: “We will start this movement by excellent working environment, career In 2020, the Group approved plans to 75% of the wastewater from the adjacent planting 30 million trees, and we aim to ACTIVE IN 15 OUT development and effective build a new ammonia and urea plant, Phosphorit plant. This reduces the impact make an even greater contribution going communication mechanisms for EuroChem Northwest 2, helping us to OF 17 UN SDGs on the Luga River, making a significant forward.” As part of this effort, EuroChem employees significantly minimise CO emissions from Sustainability is a core driver of modern contribution to the environmental 2 employees have helped to make the city • Applying the highest standards other production facilities by utilising CO2 business. The UN Sustainable QUALITY EDUCATION protection of the Gulf of Finland and of Kingisepp greener by planting new of business ethics generated during ammonia production. Development Goals provide a crucial On 1 June 2020 a groundbreaking helping to meet Russia’s international trees. measure of accountability and help us ceremony was held in the town of environmental commitments. • Ensuring access to Group information, In addition, Nevinnomysskiy Azot has Novomoskovsk, Tula region, for as well as financial transparency launched the first CO and melamine to stay on target. The Group’s second ammonia plant in 2 Sozvezdie, a centre supporting gifted production facility in Russia. It enables Kingisepp, EuroChem Northwest 2, will children. This unique educational project us to reduce our share of overall follow the same principle. Its water in Russia is being driven through the joint greenhouse gas emissions, particularly, conditioning and purification facilities will PEACE, JUSTICE AND STRONG effort of Tula region’s governor, MCC through tight CO binding in melamine. EuroChem and the Andrey Melnichenko be fitted with an extra press to minimise 2 INSTITUTIONS Foundation. Contractors have already the amount of cake waste during SUSTAINABLE CITIES AND EuroChem is subject to the laws of ZERO HUNGER started groundwork, while construction water treatment. COMMUNITIES Switzerland. We apply the Swiss Code of EuroChem recognises that sustainable EuroChem’s Mission is to improve quality is due to be completed in 2022. Best Practice for Corporate Governance, of life for the rising world population by Phosphorit’s production units also use cities and communities require as well as the principles recommended industrial water (15-20% of overall helping to grow healthy, affordable food Sozvedie’s three hectares of land will investment beyond taxes, which is why LIFE UNDERWATER by the UK Corporate Governance Code. consumption) in a closed-loop cycle, in harmony with the environment. host the Olympus full-day lyceum, a we take a holistic approach to supporting In May 2020, Kovdorskiy GOK’s thereby reducing raw water intake from The Group is committed to robust Fertilizers play an essential role in the year-round campus for 200 high school the regions where we operate. In our environmental staff worked with the Luga River. corporate governance, ensuring food supply chain and help to avoid students, the Academy of Achievement more remote communities, such as specialists from the Murmansk office of compliance with all applicable laws, rules global food scarcity, as farmers strive to educational centre, a track-and-field Kovdor and Berezniki, our responsibility Russia’s Fisheries and Aquatic Resources and regulations in the regions where it feed ever more people from finite land stadium, a multi-purpose gym, a is even greater to ensure the wellbeing Conservation Administration to release operates. All employees are responsible resources. Our fertilizers make farmers’ swimming pool and a first-aid station. of our people, their families and the more than 67,000 Atlantic salmon for respecting applicable laws and lives easier, more efficient and more The school’s classrooms and labs will wider community to maximise the quality yearlings from the Kandalaksha following the principles of our Code of prosperous, while empowering them to be fitted with state-of-the-art AFFORDABLE AND CLEAN ENERGY of life there. Experimental Salmon Farm into the Umba international equipment. Conduct and related compliance policies. fulfil their mission of keeping food on The mining operations at EuroChem One example of our work in this area is River in Kirovsky district. This was part of tables around the world, every day, no Fertilizers in Kazakhstan use clean our campaign to promote Kovdor as a an annual campaign to help to preserve We aim to maintain the highest ethical matter what the circumstances. energy, purchasing wind power from tourist destination, which won national salmon, offset Kovdorskiy GOK’s standards in our activities, in line with local energy company Zhanatas Wind- awards and helps to diversify the anthropogenic impact on the EuroChem’s values, goals and objectives. Power Station. At Lifosa, a significant local economy. environment and support the recovery of The Group’s Board of Directors and GENDER EQUALITY share of the fertilizer plant’s energy biological resources in Murmansk region. senior management set the tone at the needs is now supplied by a new solar top, which is underpinned by our Code At EuroChem, we welcome all employees In July 2020, employees of EuroChem power plant. of Conduct. GOOD HEALTH AND WELL-BEING and strive to foster a culture that does Usolskiy worked with fishery biologists Since the initial outbreak of COVID-19, not tolerate discrimination on any basis, and representatives of the fishing EuroChem has worked closely with local including gender. As of the end of 2020, RESPONSIBLE CONSUMPTION business to release more than 10,000 governments and social organisations in 29% of our staff were female. We continue AND PRODUCTION sterlet hatchlings into the Kama the towns and cities where it operates to to explore ways to ensure that EuroChem EuroChem strives to ensure the rational Reservoir, in the vicinity of Polazna stop the spread of the virus. To respond is a place where women choose to INDUSTRY, INNOVATION AND use of natural resources and maximise township. This has become a traditional PARTNERSHIPS FOR THE GOALS proactively to requests from business work and are empowered to thrive INFRASTRUCTURE waste recycling both in-house and with event held every summer for the last six EuroChem chairs several committees unit executives and local authorities, the as professionals. We aim to help farmers to optimise the help of contractors. years. As part of the Group’s of the Russian Union of Industrialists and Group established a crisis centre at the nutrient use, enabling them to increase environmental policy, we work to Entrepreneurs to promote reasonable holding company. their yields. Our promising R&D We are studying the potential uses of systematically restock water bodies to and logical legislative amendments collaboration with Belgium-based phosphogypsum, a by-product, and set Throughout the pandemic, we have mitigate any harm during construction of in the areas of health, safety and the biotechnology company Aphea.Bio is up our own R&D lab at Phosphorit to provided local communities with chlorine our industrial facilities. environment, as well as to foster the strengthening EuroChem’s commitment develop new phosphogypsum products. disinfectants for streets; tens of overall development of the industry. to investing in innovation. The research Promising areas of research include the thousands of reusable face masks for mainly focuses on developing next- development of a remediation agent, for medical institutions and utility services; generation fertilizer technologies which a contract was concluded in 2020. as well as safety goggles, protective designed to boost the take-up of key gloves, protective robes and overalls. nutrients by crops, and it uses materials We also have trailers standing guard from scientific trials at 10 European sites. to meet public health needs and have delivered street disinfection vehicles to the city of Nevinnomyssk.

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RISK MANAGEMENT Managing Risks in COVID-19 RISKS MARKET RISKS PERSONNEL RISKS EuroChem is closely monitoring demand The Group is monitoring the The principal risks and uncertainties Unprecedented Times and price fluctuations and regularly epidemiological situation in its regions of faced by EuroChem in 2020, along with updates sales forecasts to reflect various presence daily. We have also undertaken the respective actions, are outlined here The global pandemic underscores the critical nature of risk potential scenarios. numerous mitigation actions to ensure in the following pages. operational continuity, including: management to a business. Our proactive approach to risk-based As some industrial products are expected Depending on the prevailing to be in lower demand, we are exploring • moving most office staff to remote decision-making has helped to ensure resilience during these times. circumstances – whether international or possible mitigation initiatives to convert working domestic, economic, political or financial them into fertilizers and take advantage – our risk priorities will inevitably change • providing sanitiser and disinfectants of marketing opportunities later. Global from year to year. • monitoring handwashing and Following the outbreak of COVID-19, RISK ASSESSMENTS EuroChem is committed to developing sales diversification also allows us to protecting staff during lunch breaks EuroChem’s overriding priority was to We carry out risk assessments to support skills and awareness regarding risk minimise potential negative short-term Faced with the unprecedented • tracking and isolating anyone with safeguard its employees, customers, material business decisions. management and risk-based decision- effects. To date, governments worldwide challenges posed by the outbreak of potential contact with infected people communities and supply chains, while making throughout the organisation. COVID-19, EuroChem recognised the have taken steps to protect the fertilizer The relevant stakeholders are involved • restricting travel ensuring uninterrupted operations and In 2020, we undertook numerous need for a proactive approach to risk and agricultural sectors from significant in all such evaluations, and findings are sufficient liquidity. Underlying this was an activities to reinforce this as an integral management. The Group adopted a new disruption caused by COVID-19. • installing equipment to clean and communicated to key decision-makers approach that integrates quantitative risk part of our culture, including training, crisis management model to ensure that disinfect air and the management. Our risk analysis also highlighted that analysis into day-to-day management awareness sessions and publications, the business remained sufficiently • monitoring temperatures of people on the cost of production across our main and business operations, guiding When making a decision, carrying out as well as measures specific to COVID-19 resilient to support stakeholders during site assets remains competitive, even under corporate decision-making and forming a business activity or approving an (for more details, see page 3). More than a time of great need. • maintaining on-site medical staff pessimistic scenarios. This is due to a core part of the Group’s culture. initiative or budget, we apply a range of 200 employees received online and • disinfecting vehicles transporting staff As demonstrated by the financial and effective risk management and lower quantitative risk management techniques offline risk management training. to and from plants operational results for 2020, EuroChem cost curves than competitors and will to measure uncertainty. Back-testing RESPONSIBILITIES minimised the impact of the pandemic on allow us to take advantage of any • airing work premises every two hours allows us to review and continuously EuroChem’s Board of Directors oversees CONTINUOUS its business. This was largely due to the market recovery. • restricting employee gatherings improve the effectiveness of different the risk management process and IMPROVEMENT structured approach underlying its • communicating regularly with staff analysis methods. PRODUCTION RISKS reviews its effectiveness regularly. We continuously monitor and adapt our response to COVID-19, as well as its about the pandemic AND OPERATIONAL CONTINUITY RISK RESPONSE risk management practices to address vertically integrated business model and maintaining social distancing Alongside this, the management ensures All of our main plants continue to • We take great care when selecting and change, both internal and external. the fertilizer industry’s status as an that risks are adequately considered operate. Our risk mitigation actions to We are also closely monitoring the implementing risk treatments. We also As relevant gaps or improvement essential part of global food security. when setting the Group’s objectives, ensure such continuity include delaying availability and quality of personal pursue business opportunities to ensure opportunities are identified, we will All else being equal, the Group does not strategy and business plans. non-essential CAPEX and maintenance, protective equipment at our plants. that each risk is managed optimally. develop plans and assign them to those expect any material negative The management is also responsible investigating alternative suppliers and accountable. Once implemented, the consequences for the business in the for setting risk-adjusted targets and Risk response involves balancing the raising health and safety awareness IT RISKS measures will contribute to enhanced long term. providing the Board with timely and potential benefits from achieving our among employees. We have moved most of our risk management. accurate reporting on performance. objectives against the costs, efforts, LOGISTICS AND SUPPLY CHAIN management and administrative Where possible, we have increased personnel to working remotely. Systems, potential risk exposure and disadvantages Our key objectives for 2021 in this RISKS In addition, the Risk Management team inventories of critical industrial materials, infrastructure and communication involved in implementation. regard include: EuroChem’s commercial team performs coordinates activities in the area across goods and spare parts. We have also daily risk assessments of key elements of channels have been upgraded to handle the business. It provides support for adjusted working hours to avoid large MONITORING AND REPORTING • continuing to improve the maturity the supply chain. Major threats have increasing demand. We are also closely decision-making, planning, budgeting We review and monitor the results of risk numbers of employees entering and of market and credit risk management been identified, risk indicators are in monitoring cyber risks and continue to and performance management. It also analysis to verify and improve the quality leaving premises at the same time. • continuing to integrate risk place and monitored daily, and mitigation raise employee awareness about the conducts training and activities that and effectiveness of the design, growing risks of phishing and malware management into decision-making actions are implemented in collaboration In addition, we are investigating options integrate risk management principles into implementation and outcomes of our risk attacks. across various levels of the with our plants and key suppliers. and preparing scenarios and business the overall organisational culture. management. We then incorporate our organisation to progress further in our continuity plans in case of enforced findings into EuroChem’s performance We have conducted in-depth analysis FINANCIAL RISKS journey towards better risk-based shutdowns of plants, although we assess management and reporting. of any possible logistical disruptions, As part of our response to COVID-19, we FRAMEWORK planning, budgeting and performance this as unlikely. and monitor risks across sea, rail and take a closer look at our accounts We have made significant progress in management road transportation closely. We are also receivable and reassess our credit limits aligning our risk management approach CULTURE • continuing to incorporate a quantitative working with suppliers to ensure plant regularly. Credit, liquidity and foreign- with the latest updates to the ISO 31000 risk analysis approach into new At EuroChem, we see risk management stock and capacity remain at optimum exchange risk assessments are carried standard, the COSO ERM framework, investment projects (cost and schedule as an integral part of our executive levels. Some suppliers may experience out several times a week. To ensure and the requirements of the UK risk analysis) approach, organisational culture and difficulties in the future, mainly related sufficient liquidity, we run multiple cash Corporate Governance Code and its • strengthening our risk culture by: decision-making. to demand, production cost and concern flow scenarios reflecting the work of our Swiss equivalent. • developing quantitative and commercial and production teams. A strong risk culture is essential for about staff retention. We have started decision-making abilities in our risk, effective risk management, as it negotiations to ensure uninterrupted audit, compliance and project promotes individual and organisational supply, and whenever we assess the management teams awareness and informed risk-taking. risk to be high, we look for alternative This approach continuously improves our • inviting more employees to sources. decision-making. participate in our online and offline risk-based decision-making courses • improving risk management awareness and communication

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MARKETS AND GEOPOLITICAL RISKS PRODUCTION-RELATED RISKS

Risk Description Mitigation Risk Description Mitigation Market competition EuroChem is subject to intense price competition worldwide. EuroChem is a vertically integrated business with modern Health, safety, EuroChem’s operations are subject to the safety, health, The health, safety and security of our people and price volatility It competes with numerous producers globally, including production facilities that enable it to benefit from economies environmental and security and environmental risks inherent in mining, and environmental protection are EuroChem’s state-owned and government-subsidised entities. The of scale and strong geographical diversification across the security risks manufacturing, transportation, storage and distribution. overriding priorities. Group’s competitive position could also be adversely world’s most important agricultural regions. The Group can These factors could result in injuries, fatalities or loss EuroChem has implemented ‘zero harm’ goals and invests affected given additional consolidation in the fertilizer rapidly flex productivity in response to changing of property. They could also affect the biodiversity, water significantly in areas such as personal protection equipment, industry. On one hand, a reduction in the number of market market conditions. resources and related ecosystems near our facilities, training and assessment, medical examinations, compliance players could potentially benefit EuroChem. On the other, it EuroChem has a strong logistics infrastructure and its affecting our operations, financial performance checks and more to drive down the injury rate across the may also increase the resources of competitors to a level own distribution, providing it with clear competitive and reputation. organisation. Several safety-related initiatives were launched where such companies or alliances could significantly cost advantages. across the Group during 2020. influence prices and/or product demand, reducing the The diversity of the Group’s product portfolio enables sales To develop more effective measures aimed at reducing Group’s ability to compete successfully. to increase while reducing cash-flow volatility. injuries and incidents, all accidents and significant FOR MORE DETAILS, incidents are investigated using root-cause analysis. SEE PAGES 16-21, 24-27 AND 50-53 All personnel involved in investigations have received the necessary training. Changes in Government policies that are beneficial for EuroChem could EuroChem continuously monitors changes in trade laws, government policies change in a way that is adverse to the business. An increase policies and other initiatives that could potentially affect the Environmental strategies have been developed and and legislation in existing trade barriers or the imposition of new ones on business. We build strong business relationships with approved. EuroChem constantly conducts environmental the Group’s products could also cause a significant decrease federal, regional and local government bodies, confirming assessments of its production facilities, including regarding in demand in the affected markets. our responsible attitude to the economies of the regions risks and opportunities, compliance with environmental where we operate. requirements and environmental action plans. EuroChem applies quantitative risk analysis to help prioritise The Group also participates proactively in reviewing and environmental risks. developing new legislation and government policies. FOR MORE DETAILS, COVID-19-specific risk mitigation involved enforcing SEE PAGES 23 AND 79 work-from-home where possible, and otherwise minimising person-to-person by social distancing and shifts/cell work. Climate change Climate change is a significant risk for EuroChem because EuroChem takes proactive steps to minimise the FOR MORE DETAILS, agriculture and the other sectors in which it operates are environmental impact of its activities. Areas in which we SEE PAGES 10, 31, 37, 43, 58-59 AND 68-69 influenced by weather conditions. Climate change affects invest include improving water conservation and efficiency demand and could lead to new market preferences, across our plants, continuously monitoring air quality around Mining‑related EuroChem’s mining operations are subject to the hazards The mining-related risks that EuroChem faces are due mostly legislation and technology. our production facilities and sharing data with regulatory risks and risks normally associated with the exploration for and to geotechnical issues and rock mechanics. To mitigate authorities and local communities. extraction of natural resources. Any of these could have an them, we monitor our pillar and room conditions using strain impact, including: gauges and other instrumentation. The information received We take a targeted environmental approach, including in the contextualises any risk and enables us to modify mine plans design and manufacture of advanced fertilizer products • material damage to mineral properties or facilities; if needed, including main line development and room – those with properties that reduce NO₂ emissions and • personal injury or death; spacing. In addition, we continue to advance our backfilling nitrate run-off from fertilizer application. • damage to environmental and natural resources; project to manage subsidence requirements in accordance • delays in mining operations and possible legal liability. In line with industry efforts to address climate change, we with the approved design. continue to implement measures to increase energy These risks could have a material adverse effect on the FOR MORE DETAILS, efficiency and reduce GHG emissions across our operations. Group’s business, financial standing, results of operations SEE PAGES 28-33 For example, during the engineering and design phase of and prospects. new facilities at our EuroChem Northwest ammonia plant, we used around 60 leading technologies to improve Equipment failures EuroChem’s operations may be affected by equipment EuroChem is continuously improving plant reliability environmental performance or production failures, including the risk of extraordinary losses due to to minimise accidents and shutdowns. We do this by FOR MORE DETAILS, curtailments unanticipated events such as fires, explosions and adverse developing and implementing Company-wide technical and SEE PAGES 60-65 or shutdowns weather conditions. The Group’s manufacturing processes operational standards, along with best practices for safety, rely on critical pieces of equipment, which may break down operations, maintenance and turnarounds. Critical New digital There is a risk that fast-growing digital industries may have a Keenly aware of efficiencies afforded by digitalisation, or otherwise be out of service due to scheduled or equipment is identified and closely monitored. Employees technologies significant global impact on EuroChem’s production, EuroChem is increasing its digital capabilities in all unscheduled maintenance or repairs. This could result in undergo extensive training and risk-awareness programmes, distribution or sales. operational areas. prolonged suspension of relevant operations and cause a and process safety and productivity are subject to frequent Most Group facilities are equipped with advanced digital reduction in production. and regular audits. In addition, the Group has comprehensive solutions for improving productivity and supporting safety. insurance policies in place. Using a computer-managed maintenance system helps All plants have established an approach for collecting streamline preventative maintenance work, thereby reducing statistics on failures and their impact on production in the unplanned downtime considerably. form of logs. A procedure for investigating production events In January 2021, the implementation of SAP began at has also been created, whereby the root causes of incidents Kovdorskiy GOK. Following a pilot operation, the preliminary are analysed on a weekly basis and measures are taken start date for rolling out the system is 1 April 2021. to mitigate the consequences and prevent a recurrence. In 2021, there are plans to create a reliability team. We maintain a focus on digital farming to help on-farm Its members will focus on identifying problematic equipment efficiency in areas such as reducing the amount of fertilizer (bad actors) and processes that impact asset performance; required to achieve specific yield targets. addressing the root causes of failures; and developing FOR MORE DETAILS, SEE PAGES 10 AND 66 cost-and risk-optimal equipment maintenance strategies based on the globally accepted RCM and RCA methodologies and best practices. FOR MORE DETAILS, SEE PAGES 28-43 RISK CHANGE IN 2020

Risk has Risk has Risk has increased not changed decreased

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RISK MANAGEMENT / CONTINUED

PRODUCTION-RELATED RISKS (CONTINUED) FINANCIAL RISKS

Risk Description Mitigation Risk Description Mitigation Availability of raw EuroChem’s business depends on the availability, and/or The location of EuroChem’s main production facilities, which Credit risks EuroChem is exposed to certain credit risks relating to timely Credit risk is monitored on a daily basis and managed by materials and price price fluctuations, of raw materials such as natural gas, have access to its own raw materials, enables them to payment by customers for products provided on extended business units and dedicated risk professionals in line with fluctuations ammonia, apatite, sulphur and others. Natural gas is the compete strongly on costs. Our long-term relationships with payment terms. As the Group has entered new markets EuroChem’s policy and procedures. Regular credit risk primary raw material used to produce ammonia, the main key suppliers allow us to maintain an uninterrupted supply (including such emerging markets as Brazil, Argentina, reporting is available to support decision-making. The Group component of nitrogen-based fertilizers. The Group is of key raw materials. Hungary and Bulgaria), its sales and trade receivables have has also updated credit risk management methodology. self-sufficient in ammonia. Other key raw materials include FOR MORE DETAILS, also continued to grow. Automated risk analysis implemented during 2020 has phosphate rock, potassium chloride (MOP) and SEE PAGES 22 AND 66-67 enabled EuroChem to mitigate risks more efficiently. potash sulphate. We have a well-established system for credit management, with defined exposure limits at customer, product and Existing and Potential risks include delays in completion, cost overruns EuroChem’s dedicated project management function uses financial institution level. The Group’s geographically planned capital and/or defects in design or construction, all of which may risk-based methodologies to identify, assess and mitigate diversified portfolio reduces the overall credit risk. require additional investment. EuroChem’s capital expenditure project-related risks. The Group’s requirements for new FOR MORE DETAILS, programmes expenditure programme may also be affected by changes in capital have reduced due to some projects coming SEE PAGES 54-57 economic and market conditions, the worsening of which on-stream and our ability to cover some of the expenditure could reduce the economic viability of any given capital through our own cash flows. Interest rate EuroChem’s principal interest rate risk arises from its EuroChem has a well-balanced portfolio of fixed and floating expenditure project. FOR MORE DETAILS, risks floating-rate long- and short-term borrowings and project rate loans, which acts as a natural hedge against the risk of SEE PAGES 48-49 AND 54-55 finance. An increase in interest rates would increase its interest costs growing due to rising market rates. The Group interest payments. This could have a limited adverse effect can also use hedging to further reduce the volatility Licences, permits, EuroChem’s business depends on the continuing validity of The Group’s geographic expansion, together on the Group’s business, financial position, operational of interest expenses. its authorisations, including licences (such as subsoil licences with increasingly stringent regulation including licensing, certificates and results and prospects. FOR MORE DETAILS, other authorisations and associated licensing agreements), permits (including permitting and certification, necessitates a robust monitoring SEE PAGES 54-57 those relating to construction and maintenance) system. EuroChem continued to strengthen its compliance and certificates. function in 2020, revising and updating existing policies and Foreign exchange While most of EuroChem’s production is in Russia, the EuroChem seeks to minimise its foreign exchange exposure confirming international certification. The Group has also risks fertilizer business is essentially a US dollar industry. The on an ongoing basis, using derivatives to manage foreign implemented a compliance e-learning platform and other Group sells products to various markets across the world, currency exchange rate risks. Since most of our export initiatives designed to ensure compliance with relevant creating exposure to foreign exchange fluctuations both from revenues are denominated in or tied to the US dollar, a regulatory requirements. a revenue and cost point of view. Although this allows some significant appreciation in the ruble against the US dollar FOR MORE DETAILS, natural hedging, the risk remains significant. may negatively affect profitability. Foreign exchange risk may SEE PAGES 68-69 AND 93 also arise from a mismatch between recognised assets and liabilities denominated in different currencies. Key elements Shortages of skilled Competition for skilled labour is intense in the global fertilizer EuroChem is continuously working to attract and retain of our policy involve minimising the volatility of the Group’s labour or labour industry. Demand for skilled engineers, technicians, chemical qualified and motivated specialists with the necessary skills. cash flows and balancing our non-dollar cash assets and disputes experts, mining and construction workers and operators of It provides competitive wages and benefit packages, as well liabilities. Our well-established system for managing currency specialist equipment continues to increase, reflecting the as an attractive working environment. risks includes defined currency exposure limits and significant needs of other industries and public infrastructure The Group runs several collaborative projects with specialist standardised tools measuring exposure. projects. Further increases in demand for skilled labour are colleges and universities. It also operates a talent pool FOR MORE DETAILS, likely to lead to higher labour costs, which may affect programme and succession plan for key positions. SEE PAGES 54-57 EuroChem’s business. FOR MORE DETAILS, SEE PAGES 76-79 Liquidity risks It may be difficult or expensive to refinance maturing loans or The Group maintains an adequate level of liquidity through establish new finance. Adverse financial market conditions careful planning and access to revolving lines of committed Information and Cyber attacks, breaches of EuroChem’s systems or exposure EuroChem has strong Group IT capabilities and infrastructure could lead to higher funding costs and the postponement of credit. It also reduces refinancing risks by basing its cybersecurity to potential computer viruses could lead to disrupted for monitoring and addressing cybersecurity threats. EuroChem projects. long-term funding on a variety of sources to avoid operations, loss of data, the unintended disclosure of These include robust virus defence systems and diversified overdependence on individual markets and maturity periods. confidential information and damage to products and server locations. EuroChem has access to sufficient funding and borrowing property. These may result in business disruption, FOR MORE DETAILS, facilities to meet currently foreseeable requirements, SEE PAGES 77 AND 83 reputational damage, personal injury and third-party claims, combined with a cash position that covers short-term needs. any of which could affect the Group’s operations, FOR MORE DETAILS, performance and reputation. SEE PAGES 54-57

RISK CHANGE IN 2020

Risk has Risk has Risk has increased not changed decreased

86 www.eurochemgroup.com EuroChem 2020 Annual Report and Accounts 87 Strategic Report Corporate Governance Financial Statements

BOARD OF DIRECTORS Leading with Focus

SAMIR BRIKHO ANDREY MELNICHENKO GEOFFERY MERSZEI* VLADIMIR RASHEVSKIY STEVEN PACKEBUSH JUERG SEILER MICHAEL HOGAN STEPAN SOLZHENITSYN CHAIRMAN OF THE BOARD, NON-EXECUTIVE DIRECTOR INDEPENDENT DIRECTOR CEO, CHAIRMAN OF THE INDEPENDENT DIRECTOR INDEPENDENT DIRECTOR INDEPENDENT DIRECTOR NON-EXECUTIVE DIRECTOR INDEPENDENT DIRECTOR MANAGEMENT BOARD

Background and experience Background and experience Background and experience Background and experience Background and experience Background and experience Background and experience Background and experience Between 1983 and 2000, Samir Andrey is a self-made Russian Geoffery started his career at the Vladimir began his career in 1992, Between 2003 and 2018, Steve Juerg has held a number of key Michael has 32 years of From 2004, Stepan worked at the held senior management positions industrialist. Over the past 20 Royal Bank of Canada. From 1977 holding various positions in served as President for Koch Ag financial positions across different experience in the mining industry Russian office of McKinsey and at Asea and ABB Power years, he has co-founded a to 2001 and from 2005 to 2013, banking, including Vice Chairman and Energy Solutions LLC, one businesses and has over 30 years and has worked in both hard rock Company, where he focused on Generation. He then moved to number of multi-billion dollar he served in a number of senior of the Management Board of of nine Koch Industries business of international experience, and soft rock mining environments. the electric power and heat supply Alstom, where he served as Chief businesses – including fertilizer executive positions at The Dow Avtobank. In 2000, he joined MDM groups, focusing on the agriculture, including assignments in South Michael joined Potash Corporation industry in Russia and the CIS. International Operations Officer producer EuroChem, coal producer Chemical Company, including Bank, where he was appointed fertilizer and energy sectors. Africa, Hong Kong, the US and of Saskatchewan in 1989, where He supervised projects in the field and Senior Vice President, as well SUEK and power generator SGC Executive Vice President and CFO, Deputy Chairman of the Prior to that, Steve held the Switzerland. From 2012 to 2014, he held several operational roles of power generation, network as CEO of Alstom Kraftwerke in (now directly owned by SUEK) and CEO and Chairman of the Management Board. In December positions of Executive Vice he served as CFO at Ventyx, the prior to serving as General development and operation, as Germany. In 2003, he became – which are among the largest Board of Dow Europe, Middle East 2001, he became Chairman of the President at Koch Fertilizer, Vice Enterprise Software business of Manager at a number of mines. well as sales activities. Stepan has CEO of ABB Lummus Global. companies globally within their and Africa. He served on Dow’s Management Board. He became President at Koch International and ABB. Prior to this, he was global From 2007 to 2009, he was worked at SUEK since 2018, In 2006, he was appointed to the industries. In the early 1990s, Board from 2005 to 2009, was President of SUEK in 2004 and Manager Business Development at CFO at ABB Power Systems assigned as General Manager for becoming CEO from May 2020, Group Executive Committee of Andrey co-founded MDM Bank, lead director of Dow Corning was CEO of SUEK from the end Koch Agriculture, leading various Division and CFO at ABB Arab Potash Company in Jordan. and served as CEO of SGC from ABB Ltd, and served as Head of which under his leadership Corporation from 2005 to 2010, of that year until May 2020. Since aspects of the agriculture and Lummus Global. From 2010 to 2014, he served November 2018 to May 2020. the Power Systems Division at ABB became one of Russia’s most and was a director on the boards 2011, he has been a member fertilizer businesses. Qualification as Vice President, Senior Vice In this role, he supervised the Group. From October 2006 to successful and largest private of the Chemical Financial of SUEK’s Board of Directors. upgrade of the group’s energy Qualification Juerg holds a master’s degree President and President for Potash 2016, Samir was CEO of Amec banks. In the 2000s, he exited Corporation and Chemical Bank Vladimir is also a member of the Corporation’s Potash Division. facilities, developing the heat Steve holds a bachelor’s degree in Economics from the University Foster Wheeler (formerly Amec), MDM Bank, while investing in from 2006 to 2010, respectively. Board of Directors of Interregional supply infrastructure and improving in Agriculture Economics from of St Gallen, Switzerland. Michael has served as a director where he was widely credited with already-privatised industries From 2001 to 2005, he was Distribution Grid Company the environmental efficiency Kansas State University. for Arab Potash Company, the company’s financial recovery. – fertilizers, coal and steel pipes Executive Vice President and CFO of Siberia. of power facilities. (which he exited in 2006 of Alcan. Geoffery also served as Saskatchewan Mining Association, Samir served as a non-executive Qualification Saskatchewan Potash Producers Qualification director of Skandinaviska Enskilda through an IPO). an executive committee member of the European Chemical Industry Vladimir graduated from the Association and International Stepan is a graduate of Banken (SEB) and is a member of Andrey is the beneficiary and a Minerals Innovation Institute. He is Massachusetts Institute of the advisory board of Stena. He is member of the Board of Directors Council (CEFIC) from 2009 to 2012. Finance Academy under the He brings more than 30 years’ Government of the Russian also a member of the Association Technology and Harvard Chairman of the Board of Directors of EuroChem Group and SUEK. of Professional Engineers and University. He specialised in the of SUEK. He chairs SUEK’s Strategy experience in corporate Federation, majoring in Global governance and finance to Economics. He holds a degree Geoscientists of Saskatchewan. regulatory and environmental Samir has served as a UK Business Committee and EuroChem’s EuroChem. in Economic Science. Qualification aspects of the power industry. Ambassador, and was co-chair Nomination, Remuneration and of both the UK-UAE CEO Forum Corporate Governance Committee. Geoffery currently serves on the Michael is a graduate of Queens and the UK-Korea CEO Forum. He also sits on the Board of the boards of OC Oerlikon AG and University with a Bachelor of A member of the advisory board of Russian Union of Industrialists and Clariant AG and is also Chairman Science in Mining Engineering LIFE Lebanon and a member of the Entrepreneurs, where he chairs its and CEO of Zolenza AG, an and has completed executive advisory board of SOAS University Mining Commission. investment and advisory firm programmes at both Queen’s University and University of of London, he was also the 2009 Qualification based in Switzerland. Western Ontario. and 2016 chair of the World Andrey studied Physics at Qualification Economic Forum’s Engineering Lomonosov Moscow State Geoffery holds a BA in Economics and Construction Board. He served University and graduated from from Albion College, Michigan, US. as chair of the Forum’s Disaster the Plekhanov Russian Academy Resource Partnership and of Economics with a degree was co-chair of the Forum’s in Finance. Infrastructure and Urban Development Industries Committee. COMMITTEES MEMBERSHIP Qualification Samir holds a Master of Science Strategy Committee degree in Thermal Technology from the Royal Institute of Audit Committee Technology in Stockholm Nomination, Remuneration (Sweden). He received an and Corporate Governance Honorary Doctorate from Cranfield Committee University in the UK. He is also a graduate of the Young Managers Health, Safety and Programme at INSEAD and the Environment Committee Senior Executive Programme at Stanford University. Chairman * Geoffery Merszei left the Board as of Dec 31, 2020. 88 www.eurochemgroup.com EuroChem 2020 Annual Report and Accounts 89 Strategic Report Corporate Governance Financial Statements

CORPORATE GOVERNANCE

The Board’s overall role is to steer, support BOARD SECTOR EXPERIENCE BOARD TIME and oversee EuroChem’s business and strategies ALLOCATION in a manner that secures a sustained increase Scientific and in shareholder and stakeholder value. information technology 63% Sales and The Board members act as a resource and offer their marketing 50% 11% expertise and experience for the benefit of the Group. Mining 50% 17% 42%

Oil, gas and power industries 75% 30% Agricultural and food industries 50%

The Board also ensures that EuroChem OUR APPROACH TO BOARD PRIORITIES Chemical and commodity industries 75% Board meetings adopts and maintains international GOVERNANCE Audit Committee standards and best practices. It monitors Risk and Strategy Committee the Group’s accounting function, risk crisis management 100% Nomination, Remuneration and management processes, internal controls Corporate Governance Committee and governance framework. Its activities EuroChem’s corporate governance The Board’s principal activities include: Financial are aligned with the principles set out system is based on the following 100% in the Articles of Association and the principles: Developing and setting the Group’s overall strategy Regulations of the Board of Directors. Operating Treating our shareholders fairly 100% BOARD EXPERIENCE Each member of the Board is expected Overseeing EuroChem’s borrowings to have a good understanding of the Recognising and protecting their rights and treasury policy business and the industry in which it operates. Directors develop relationships Operating an effective system Reviewing and deciding on material with the management team, enabling of internal control and audit acquisitions, contracts, major capital BOARD COMMITTEES them to readily obtain information on key expenditure projects and budgets 25% issues as well as strategy implementation Ensuring access to Group information, (supported by the Strategy Committee) and risk management. as well as financial transparency Overseeing risk management and The Board may delegate the preparation and execution of its decisions Applying the highest levels of internal controls (supported by the to Committees or to its individual members. The Board has appointed four 75% business ethics Audit Committee) standing Committees: the Strategy Committee; the Audit Committee; the Nomination, Remuneration and Corporate Governance Committee; and Providing an excellent working Reviewing and deciding on succession the Health, Safety and Environment Committee from 2021. environment, career progression and planning and appointments (supported effective communication mechanisms by the Nomination, Remuneration and Committee Principal function Russia expertise for employees Corporate Governance Committee) International experience Audit Committee Assists the Board in overseeing the reliability and integrity of financial reporting, accounting policies and Overseeing corporate governance disclosure practice. and compliance issues (supported by the Audit Committee) Reviews the adequacy and effectiveness of the management reporting and control systems to manage risks and Instilling safety culture while ensuring ensure compliance. sustainable business practices through Strategy Assists the Board in overseeing the Group’s strategic the newly created HSE Committee direction, evaluating strategies regarding growth Committee opportunities, sales, marketing and operations, as well as Reviewing and endorsing assessing new business proposals, including acquisitions corporate policies and joint ventures.

Nomination, Assists the Board in discharging its corporate governance responsibilities in relation to remuneration and incentive Remuneration programmes, succession planning for directors and other and Corporate senior executives with a view to the challenges and Governance opportunities facing EuroChem, as well as the skills and Committee expertise the Board will need in future.

Assists the Board in ensuring that the Group’s policies, Health, Safety procedures and working practices regarding health, safety and and Environment environmental protection meet or exceed any legal obligations, Committee with the object of promoting the wellbeing and safety of EuroChem’s employees, its customers and others who may be affected by its activities, as well as appropriate protection of the environment.

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CORPORATE GOVERNANCE / CONTINUED

DECISION-MAKING EFFECTIVENESS DIRECTORS’ INDEPENDENCE EQUAL OPPORTUNITIES EuroChem’s geographical expansion, WHISTLEBLOWING To fulfil its function, the Board receives At its meetings towards the end of the We apply the UK Corporate Governance At EuroChem, we are committed to together with increasingly stringent We promote EuroChem’s ‘zero tolerance up-to-date, comprehensive information year, the Board reviews its activities Code’s definition of ‘independent’ attracting the best people who possess regulatory requirements, necessitates a of non-compliance’ culture. This in a timely manner. Directors receive over the previous 12 months and director. A key criterion is that the the right mix of talent, experience robust monitoring system. Early warning encourages dialogue and openness, occasional updates in addition to discusses how it can improve its individual is free from any conflicts and attitude. We promote a working of any changes in relevant legislation is including through the established materials prepared for scheduled overall performance. of interest. Should actual or potential environment that is free from also essential to the Group’s planning whistleblower system. quarterly meetings. These include conflicts arise, independent directors are discrimination and treat colleagues and compliance activities. In 2020, we The Board undertakes a rigorous We have a whistleblowing policy in place management accounts, updates on notified and required to act appropriately. equally, regardless of age, disability, continued to strengthen the compliance evaluation process by completing a that allows our employees who wish to health, safety and environment (HSE) gender, ethnicity, marital status, sexual function, revising and updating existing self-assessment questionnaire, followed All directors are required to inform raise any issues of concern relating to matters, media coverage summaries, orientation or religion. policies as required on a continuing by interviews with the chairman. The EuroChem of any events that could the Group’s activities to do so on a as well as details of corporate events, basis. We maintain the Group questionnaire is designed to provide compromise their independent status. Our workforce is made up of many confidential basis by contacting a hotline. strategic investment projects and any Compliance Programme through the directors with an opportunity to examine New directors must declare any conflicts individuals with diverse skills, values, legal proceedings. ongoing education and training of our All reports are formally investigated how well the Board is operating and to of interest and sign up to the Group’s backgrounds and experiences. employees on our Code of Conduct and by the compliance function with support The management team advises directors make suggestions for improvement. The Board Regulations. These require them We respect and value the benefit of compliance policies. New employees from relevant functions within the of all significant corporate events at the questionnaire primarily covers to refrain from taking any action that this diversity and are committed to receive compliance training as part of business. Incidents and their outcomes earliest opportunity. This communication governance, the Board agenda, the could lead to any conflict, with an creating and maintaining both a diverse their onboarding, and the compliance are reported to the Audit Committee and process, which is defined in a policy and Board’s role in EuroChem’s strategy, the obligation to inform the Chairman at workforce and an inclusive workplace function provides refresher training the Board. A number of calls were made associated procedures, enables the performance of the Board, the chair and the earliest opportunity should such for all employees. and updates for existing employees. to the external hotline during the year Board to make balanced and informed the senior management, succession a situation arise. Our education programmes help to The Compliance e-learning platform and management action was taken assessments of the Group’s performance, planning, and the relationship and The Conflict of Interest Policy is identify talented, motivated young continues to operate across the Group, where appropriate. No issues were position and prospects. information flow between the Board and accessible via the Corporate Governance individuals within EuroChem and play delivering customised online training and raised that required any direct action management team. The Board makes full use of each section of EuroChem’s website at a significant role in our drive to provide providing our employees with the tools from the Board. director’s unique experience and Following interviews and a final www.eurochemgroup.com. new opportunities for women and and knowledge needed to build a culture perspective, ensuring that each individual assessment report, all Board members’ prepare them for leadership roles of compliance. At the end of 2020, five of the Board’s has ample opportunity to freely express recommendations and suggestions are within the Group. We take an integrated eight directors were fully independent We recognise our ethical and regulatory their opinion. To fully understand the considered at the meetings of the Board approach to training and professional of the Group’s executives, affiliates and responsibilities to act in accordance business and operations, directors have and separate Committees, and a further development for all categories of major counterparties. Their status as with applicable anti-bribery and anti- the opportunity to visit EuroChem action plan for areas of focus is agreed. employee at all our plants, from workers ‘independent’ is confirmed after each corruption laws and regulations in all our facilities. and specialists to the most senior levels For details on the Board assessment election or re-election to the Board, using global locations. EuroChem is committed of management. Additionally, they may participate in results and key focus areas for the next a standard questionnaire relating to to a zero-tolerance policy and will not separate deep-dive technical sessions year, please see Board Assessment the declaration of interests. The non- Our Board exhibits a mix of experience, abide any acts, attempted acts or and Q&A discussions with the CEO, on page 96. executive directors exercise independent, age and nationality. We continue to look assistance with any form of bribery or senior management team and facilities objective judgement regarding Board at ways of achieving greater female corruption, whether direct or indirect. No external evaluation of the Board’s management experts attached to one decisions, and scrutinise and representation in senior roles, including In our Anti-Corruption Policy, we give our effectiveness is conducted. of the Group’s facilities. challenge management. at Board level. employees and other stakeholders with INDUCTION PROCESS whom the Group has a relationship clear The framework of Board activities and There is a clear division of COMPLIANCE AND OTHER guidance on our anti-corruption values principal agenda items are planned a On joining the Board, each new director responsibilities between the Board STATEMENTS is given a clear and comprehensive and our commitment to upholding them. year in advance, taking into account the leadership and the executive leadership EuroChem is subject to the laws of picture of EuroChem and its operations. optimal cycle for reviewing recurrent of EuroChem’s business. Switzerland. We apply the Swiss Code of One of the key messages running This formal induction process includes issues such as budgets, financial best practice for Corporate Governance, through our guidance on anti-bribery and a series of meetings with key managers LEADING BY EXAMPLE reporting and strategies. The timing, as well as the principles recommended anti-corruption procedures relates to our from across the Group. It also requires The Board establishes the Group’s expectations and goals of these reviews by the UK Corporate Governance Code. top-level commitment. The management a director to become familiar with the purpose, values and strategy, and are well understood by the directors and EuroChem is committed to robust has the ultimate responsibility both for regulations relating to Board procedures satisfies itself that these and its culture the management team alike. They corporate governance through ensuring that our Anti-Corruption Policy and standing items on the Board’s are aligned. All our directors act with include detailed updates on core compliance with all applicable laws, rules is effectively communicated to all forward agenda. New directors also have integrity, lead by example and promote operational areas, investment projects and regulations wherever it operates. employees, and for demonstrating that and strategy. the opportunity to visit EuroChem the desired culture. The Chairman of adequate systems and controls are facilities to obtain a first-hand the Board oversees and steers its We strive to uphold the highest ethical designed and operate effectively. understanding of the Group’s operations. deliberations, ensuring its effectiveness standards across all our activities, in line The management is also responsible by enabling open communications and with EuroChem’s values, goals and Two new non-executive directors joined for ensuring that all employees receive cultivating an atmosphere of mutual objectives. The Board and senior the Board this year and undertook a sufficient and adequate training. respect and constructive debate. management drive the corporate culture broad induction process, which included We monitor compliance with this Policy and set the ‘tone at the top’, both of a combination of video presentations, The CEO and members of the and associated procedures on a which are underpinned by our Code seminars, Q&A discussions with the CEO, Management Board are responsible regular basis, and our compliance of Conduct. New directors and all workshops with site senior management for the day-to-day management function takes any necessary action employees receive a copy of the Code teams and facilities management experts. and operations of EuroChem. to prevent breaches. during their induction process. All Due to the COVID-19 pandemic, the The Management Board comprises key employees are responsible for respecting The compliance and anti-corruption number of face-to-face meetings has managers with responsibility for daily applicable laws, as well as for following policies are accessible via the Corporate been substantially reduced and all site operations, finance and accounting, the principles of our Code of Conduct Governance section of the Group’s visits cancelled until further notice. fertilizer production, mining, sales and and associated compliance policies. website at www.eurochemgroup.com. marketing, as well as implementation of large capital projects. The Code of Conduct is accessible via the Corporate Governance section of the Group’s website at www.eurochemgroup.com.

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CORPORATE GOVERNANCE / CONTINUED

LEGAL AND REGULATORY BOARD COMPOSITION AND BOARD BOARD CHANGES IN 2021 2. COVID-19 RESPONSE GOVERNANCE ENVIRONMENT CHANGES IN 2020 BOARD AGENDA The Board discussed the ongoing Stefan Judisch rejoined the Board and The EuroChem Group comprises the At the start of 2020, the Board comprised response to the challenges presented by STRUCTURE chaired the Strategy Committee, with FOR 2020 parent entity, EuroChem Group AG (the seven directors: Samir Brikho (Chairman), COVID-19 and the most prominent risks EuroChem’s highest-ranking corporate membership of the Audit Committee, in The outbreak of the COVID-19 pandemic “Company”), and its subsidiaries Andrey Melnichenko, Geoffery Merszei, in relation to business continuity. governance body is the General Meeting February 2021, after holding the position early in the year upended economies (collectively the “Group” or “EuroChem Juerg Seiler, Stefan Judisch, Petter Østbø of Shareholders (GM). The Board of of CCO since 1 August 2020. He will be throughout the globe, leading to the The Board’s oversight of issues related Group”). The Company was incorporated and Steven Packebush. In January 2020, Directors is elected by – and reports replaced in that role by Gareth Griffiths, lockdown of the Group’s headquarters. to COVID-19 was a central focus during under the laws of Switzerland on 17 July Michael Hogan joined the Board. directly to – the GM. The Board of who has been deputy CCO since Nevertheless, the Board and Committees’ 2020, helping the management to 2014 and has its registered office at Directors appoints the Chief Executive At the annual General Meeting of 1 December 2020. work continued throughout the navigate the pandemic. Baarerstrasse 37, 6300, Zug, Switzerland. Officer (CEO) and the Management Shareholders held on 15 May 2020, all lockdown, with 12 Board meetings being COVID-19 RESTRICTIONS The Board also received regular status Board, and determines the length of their We have introduced the principles eight Board members were re-elected conducted virtually and in absentia As a result of the COVID-19 pandemic, updates on the COVID-19 situation at all mandates. The CEO and Management recommended by the UK Corporate to the Board. during the year. most meetings in 2020 were conducted Group locations and reviewed pandemic Board report directly to the Board of Governance Code and apply recognised Since the annual General Meeting of using video conferencing technology, Key agenda items discussed by the response plans. Directors, which is represented by international best practice, including Shareholders, a number of changes in as provided for in the Board and Board during the year included: the Chairman. as follows: EuroChem takes all necessary measures the Board’s composition have taken Committee Regulations. 1. HEALTH, SAFETY AND to protect its employees and operations. The Board works to a forward agenda. • The positions of Chairman of the Board place. Stefan Judisch stepped down from ENVIRONMENT As most of the meetings continue to run We regularly discuss the current situation This is updated annually and considers of Directors and Chief Executive the Board to become the Group’s Chief via video conferencing and the Group’s We continued to work on developing at Management Board meetings and all issues that are referred to it by the Officer are separated Commercial Officer (CCO) starting from employees are still working remotely, a EuroChem Safety Programme. are maintaining preventive efforts. law, the Group’s Articles of Association 1 August 2020. Vladimir Rashevskiy was • Board members are elected and the EuroChem pays particular attention to As part of regular flash, management Our COVID-19 Task Force also continues and Regulations on the Board of elected as a new Board member at the Board’s performance is regularly ensuring a safe virtual environment. and CEO reports, HSE reports were to meet weekly to coordinate our Directors. The Board reviews the final extraordinary General Meeting of assessed regularly presented to the Board. pandemic response. We are in close draft of the agenda in advance at the Shareholder on 4 September 2020. Our IT function had enhanced security • The Board has a majority of All serious incidents were reviewed contact with local, regional and national end of each year, to suggest any Petter Østbø resigned as Board member measures in the video conferencing independent and non-executive by the Management Board, and the authorities to ensure coordinated action. modifications before final approval. and CEO effective 6 September 2020. systems and promoted best practices to directors corresponding preventive measures We are also monitoring the potential Stepan Solzhenitsyn joined the be followed by all parties using them, The meeting schedule for the year • The independence of individual were approved and reported to availability of vaccines to ensure that EuroChem Board on 15 December 2020 including through regular trainings, includes as a rule six joint-presence members is verified by the Board the Board. we can provide all our employees who and Geoffery Merszei resigned from the communication of guidelines meetings covering issues that require annually want one with the possibility, as soon as Board effective 31 December 2020. and instructions. In 2020, the Group made significant substantive discussion. The Board also • Individual Board members avoid improvements in HSE reporting it appears. holds supplementary meetings to potential conflicts of interests when After the mentioned changes, as Together with the IT function, the transparency on all types of injuries, For more details on our COVID-19 address any significant matters that may making decisions of 31 December 2020, EuroChem’s Corporate Secretary reviewed and including minor medical cases. Increased response, please see page 3. arise during the year. multi-national Board of Directors SHAREHOLDER STRUCTURE checked video conferencing software reporting transparency resulted in comprised seven directors, as presented solutions available on the market to 3. STRATEGIC DEVELOPMENT The Board also participates in workshop- As at 31 December 2020, AIM Capital substantial growth in the number of on pages 88-89 of this report, with their select one that best meets our security In 2019, EuroChem refreshed its strategy style sessions to discuss key points S.E. owned 90% (31 December 2019: lost-time incidents in 2020, as well as a diverse competencies: Samir Brikho, recommendations. For every meeting, an through 2025 to define the next frontier in the processes with management. 90%) of the share capital of EuroChem significant 33% year-on-year reduction in Andrey Melnichenko, Michael Hogan, IT employee is delegated to set up a of business development, restating the Group AG, while MCC EuroChem JSC, a the number of fatalities. Unfortunately, EuroChem’s legal and compliance Steven Packebush, Vladimir Rashevskiy, secure meeting environment. Group’s Mission, Vision and key wholly owned subsidiary, held the there were still two fatal accidents in functions oversee the preparations for Juerg Seiler and Stepan Solzhenitsyn. strategic targets. remaining 10%. NEW AUDITOR 2020, which underscores the fact that the Board and Committee meetings. there is still much room for further In February 2021 the Board approved a During the year, the Board, through The agenda is prepared in conjunction SHARE CAPITAL improvement in terms of HSE. change of auditor from PwC to Deloitte. its Strategy Committee, monitored the with the Chairman, CEO and Corporate As at 31 December 2020 and 31 Group’s implementation of its strategic Secretary. Materials are distributed to December 2019, the nominal registered In 2020, EuroChem continued to plan, providing feedback and advice to the Board and Committee members amount of the Company’s issued share strengthen its safety and productivity the management. in advance by email and uploaded to capital in Swiss francs (CHF) was culture. The Management Board decided to establish the Executive HSE a specialised portal. CHF100,000. The total authorised The Board reviewed the development of Committee, chaired by the CEO, to number of ordinary shares is 1,000 the EuroChem VolgaKaliy and EuroChem The following key documents define pay more attention to systems and shares with a par value of CHF100 Usolskiy potash projects, both of which EuroChem’s approach to corporate procedures, as well as to foster a per share. are key strategic initiatives, to ensure governance: stronger safety culture. In addition, we that key risks have been identified and welcomed a new Head of HSE to our • Articles of Association appropriately mitigated. EUROCHEM GROUP AG SHAREHOLDERS team, Oleg Nikolaenko, who has more • Code of Conduct As at 31.12.2020 than 25 years’ experience in HSE with In May, the Board approved a proposal ​ No. of shares Share capital % • Regulations on the Board of Directors companies such as Gazprom Neft to develop a project to build a plant • Organisational Regulations AIM Capital S.E. 900 90 and TNK-BP. in Kingisepp, Russia. In June 2020, • Audit Committee Regulations MCC EuroChem JSC 100 10 the engineering, procurement and To emphasise the Board’s adherence Nomination, Remuneration and construction contract for the project • to continuous improvements in the HSE Corporate Governance Committee was signed with Tecnimont SpA. In area, the Board HSE Committee was Regulations September 2020, the final investment established in December 2020. It is decision was made to pursue • Strategy Committee Regulations chaired by Michael Hogan. • Health, Safety and Environment project development. Committee Regulations For more details on HSE efforts, see page 97.

94 www.eurochemgroup.com EuroChem 2020 Annual Report and Accounts 95 Strategic Report Corporate Governance Financial Statements

CORPORATE GOVERNANCE / CONTINUED

The Board regularly reviews FINANCIAL STABILITY AND In February, Lawrence Berthelet became In line with the practice established last HSE COMMITTEE KEY PRIORITIES FOR 2021 presentations providing an overview INVESTMENT CONTROL Head of the Mining Division in place year, the Board carried out a ‘Board clock of and progress on M&A projects and The Board monitored the Group’s 2020 of Oleg Shiryaev, who was appointed analysis’ to assess, based on the Board’s Key priorities Overview of activities opportunities as part of the Group’s financial planning and approved its as Head of the Large Capital agenda for the year, whether Boardroom Review of HSE policy, • Establish incident severity framework by category overall strategic development. In 2020, consolidated budget for 2021. It also Projects Division. discussions were effective and had the management and (people, equipment, transport, etc.), determine these included the industrial salt strategy, regularly reviewed EuroChem’s right focus. The results obtained help to From January 2021, Oleg Shiryaev standardisation systems, baseline criterion iron ore concentrate monetisation performance (including management adjust the focus of future discussions and became the Head of the HSE Incident framework strategy and phosphate strategy. accounts, flash reports and facilitate well-structured meetings. • Update incident reporting framework Fertilizers Division. CEO’s reports). In June, the Board held a separate This year, the Board also focused on how • Assign owners and allocate resource site by site BOARD ASSESSMENT one-day strategy workshop to discuss To ensure the Group is sufficiently to get more value out of the Board and The Board performance assessment • Update incident response requirement, key strategic matters, including reviewing financed to support current operations, Committee meetings and make them takes place on an annual or semi-annual investigation framework the major disruptors potentially affecting repayment of loans and other corporate even more effective. One of the ways basis and is conducted within the terms the agricultural and fertilizer industries business, the Board approved a number is to change the “pre-work” practice, • Establish ‘lessons learned’ and knowledge- of reference of the Nomination, over the next 15 years (to 2035). of key financing transactions during meaning that beyond reading in advance sharing database Remuneration and Corporate the year. materials for the meeting, the Board can • Conduct statistical review of incidents by Division For more information on EuroChem’s Governance Committee, with the aim exchange feedback ahead of the RISK AND INTERNAL CONTROL and Group level strategy, see pages 18-19. of improving individual Board member meeting using specific web-based wiki contributions and the effectiveness of the EUROCHEM BUSINESS SYSTEM The Group maintains an effective system platforms created for each individual of risk oversight, risk management and Board as a whole. Priority prevention • Identify sites with least-successful HSE record In 2020, EuroChem continued to roll out strategic project. Each Board member internal control. Like all international programmes (Safety Barriers) the EuroChem Business System (ECBS) In line with established practice, in June now has access to all available wikis • Develop a procedure and simultaneously companies, EuroChem faces many despite the disruptions caused by the and December 2020, the Board within the Group to post questions and implement pilot initiatives business risks that it needs to handle in COVID-19 pandemic. Our focus was on assessed its own performance and that receive answers. This allows all Board its ongoing business. The Board reviews • Develop preventive and mitigating barriers using sustaining existing rollouts and of the management to identify any members to weigh in and means that the policies and procedures relating to the bowtie method establishing the complete set of impediments to greater effectiveness meetings can be shorter, more focused risk oversight and management on an diagnostics for all of EuroChem, while on both sides. and result in better insights, as well as • Tailor to a site’s local risk profile annual basis via the Audit Committee. improvement targets and roadmaps more informed decisions. The Board assessment revealed that the • Audit of implemented ‘barriers dashboard’ remained intact. In June 2020, the Board reviewed Board needs greater visibility in relation DIRECTORS’ REMUNERATION an updated 2020 Risk Management • Update non-compliance implications for KPIs and The Board regularly reviewed progress to overseeing the implementation of Matters concerning directors’ Strategy sharpening its focus on treasury, disciplinary actions reports on the development of the ECBS EuroChem’s strategic initiatives, helping remuneration are referred to the General hedging and corporate finance project at every Strategy Committee meeting. the management to prioritise and direct Meeting of Shareholders. The Board management, and the consolidation of Formalisation of Safety • Establish Safety Briefings as a powerful incident multiple strategic initiatives. More Member Remuneration Regulations allow prevention tool Since launching the ECBS in September insurance programmes. The Board will Briefings prior to start frequent updates on ongoing and the payment of additional remuneration 2019, we now have fully operating teams ensure the ongoing performance of of operations planned key events and developments to Board members by resolution of either at every major production site with corporate governance obligations related in the Group would also be helpful for the General Meeting of Shareholders or Induction courses, adaptation • Formalise, digitise, and simplify briefings for new standard processes in place resulting in to risk management and provide support the Board to assist the management in the Board of Directors. Unless a director of new employees and and existing employees regular operational efficiency discussions for business decision-making through proactively identifying and addressing is performing an individual assignment, HSE training with site and division top management. quantitative risk analysis. • Develop HSE competence model for HSE and key issues. In this context, the Board remuneration is fixed and adjusted To continue progressing towards our full operating personnel For more information on Risk, please plans to work with the management to according to Committee membership, operational efficiency potential, we plan refer to pages 82-87. improve reporting and advance planning chairmanship and curatorship. As set out • Create HSE course catalogue, use online tools for to introduce monthly meetings of the next year. in the Board Member Remuneration staff training operational efficiency committees at the APPOINTMENTS AND INCENTIVES Regulations, only non-executive directors CEO level to ensure that ambitious yet One of the Board’s principal objectives is Management resources and succession are entitled to remuneration. • Publish standard posters for sharing realistic targets are set and improvement to ensure continuity of strong leadership. planning are other areas on which the of lessons learned initiatives are implemented rapidly. Board plans to focus greater attention in The total amount of remuneration paid to The Board oversees the appointment of the coming year. directors for their contributions in 2020 Environmental risk • Establish fundamental standards In early September 2020, a full-time directors and key managers and reviews amounted to US$2 million, including management of environmental safety ECBS controlling function was to focus their performance and compensation. The assessment also included an US$421,139 in compensation for work- Develop and implement a procedure to identify on impact verification, as well as evaluation of the Board’s ability to related expenses. • improving overall transparency and In 2020, the Board approved several challenge the management critically, as corporate environmental risks automation of operational new appointments and departures of key well as to be rigorous in asking questions 2020 2019 ​ US$K US$K • Develop an environmental risk register and efficiency metrics. Group personnel. and standing up for a point of view. Total remuneration approve corrective action plan For more information on the EuroChem Petter Østbø stepped down from the The assessment of the Chairman’s paid to Board • Develop permit register and monitor validity Business System, please see pages 16-17. Board and CEO position in September. performance covered a number of members 1,579 1,362 Vladimir Rashevskiy, formerly the CEO periods of each permit aspects, including his relationship Total compensation of SUEK, was appointed as CEO effective with the members of the Board and for work-related • Develop the procedure for environmental audits 21 September 2020. management; his ability to promote expenses 421 751 (diagnostics) and checks, including Industrial Stefan Judisch was re-appointed as CCO constructive debate, take effective Environmental Monitoring in August, replacing Charlie Bendaña, decisions, listen and give each Board EuroChem does not have a long-term who became Global Head of Sales & member an opportunity to weigh in; and incentive programme or stock options HSE information and • Update the InSight IMS implementation plan Distribution. his demonstration of leadership qualities. plan in place. The Group pays liability management system (see page 10 for more on InSight) insurance costs for the Board of Directors The assessment reviewed the Chairman’s • Create a working group and develop Group-wide Axel Thorsdal, who held the position of performance as highly effective. and Management Board. Chief Legal and Compliance Officer, left implementation plan the Group in September. His replacement Government and stakeholder • Update Company process to identify was Alexander Redkin, the Chief Legal relations and ensure compliance with changing and Compliance Officer at SUEK. regulatory environment

96 www.eurochemgroup.com EuroChem 2020 Annual Report and Accounts 97 Strategic Report Corporate Governance Financial Statements

CORPORATE GOVERNANCE / CONTINUED Audit Committee

The Audit Committee oversees the The Audit Committee’s role, quality of EuroChem’s financial and responsibilities, composition and integrated reporting, as well as the membership requirements are integrity of its information disclosure. documented in the Audit Committee The Committee ensures the adequacy Regulations approved by the Board and of the Group’s compliance activities, available in the Corporate Governance including risk management. It also section of our website. oversees its relationship with the external auditor and directs and monitors the performance of the internal audit function.

GEOFFERY MERSZEI CHAIRMAN OF THE AUDIT COMMITTEE (RESIGNED 31 DECEMBER 2020) KEY PRIORITIES FOR 2021 AUDIT COMMITTEE ACTIVITY IN 2020

Key priorities Overview of activities External auditor Internal audit COMMITTEE Oversee internal processes, • Overseeing a broader range of risks, including • Monitoring the performance of the Group’s external auditor • Reviewing the performance and effectiveness of the MEMBERS monitor and maintain an financial risks, legal/regulatory compliance, cybersecurity and data privacy, as well as health and its independence status internal audit function Geoffery Merszei (IND) effective internal control and risk management and safety, remote work and other operational CHAIRMAN • Reviewing the annual plans of the external auditor for 2020 • Approving the internal audit transformation programme, risks posed by COVID-19 (UNTIL 31 DECEMBER 2020) environment including and overseeing the auditor’s work throughout the year, plan and budget for 2021 beyond the core financial • Evaluating the pandemic’s impacts on the internal including an assessment of its effectiveness Juerg Seiler (IND) reporting and related control • Assessing the effectiveness of the internal audit function, control environment and ensuring the CURRENTLY ACTING CHAIRMAN risks • Approving the annual fee for audit services and overseeing its independence, and the adequacy of its resources (EFFECTIVE 1 JANUARY 2021) effectiveness of internal controls compliance with the policy for non-audit services and funds Stefan Judisch • Sharpening focus on internal controls over • Holding regular private meetings with the external auditor • Considering key findings of internal audit reviews (UNTIL AUGUST 2020, REJOINED financial reporting and monitoring financial and the management’s response to these FEBRUARY 2021) reporting processes Financial reporting • Holding regular private meetings with the Head • Reviewing and making recommendations to the Board Overseeing the effectiveness of the overall risk of Internal Audit Oversee risk management • for approval of the annual audited consolidated management programmes, legal and regulatory activities financial statements compliance, as well as cybersecurity risk Information disclosure • Approving half-year unaudited consolidated financial • Reviewing the quality and integrity of financial and 11 Regularly reviewing updated risk assessment • statements non-financial data, including the 2019 annual report and results with related ongoing or planned mitigation meetings financial press releases published during the period, as actions, focusing on key risks • Monitoring the evolution of accounting standards well as disclosures related to the COVID-19 pandemic and expected relevant changes in legislation • Continuously improving the risk management • Monitoring and endorsing the risk management and processes, performance and capabilities • Reviewing significant accounting, financial reporting corporate governance sections of the 2019 annual report and other issues raised by the management and internal Oversee transformation of • Overseeing the results of the compliance and external auditors • Discussing EuroChem’s financial and operating results with the compliance and internal and internal audit function the management and the external auditor prior to filing the audit functions, reinforcing transformation programmes Risk management and internal control annual report their quality • Overseeing the implementation of the updated • Reviewing the Group’s risk map, risk management compliance and internal audit development framework and strategy programmes and strategies • Reviewing existing internal controls and their efficiency • Regularly monitoring and assessing internal audit • Assessing the Group’s insurance policy and directors’ effectiveness, as well as assessing the adequacy and officers’ liability insurance of the internal audit function’s resourcing • Monitoring compliance issues on a regular basis including • Assessing internal audit findings and the breadth tax, credit controls, data storage and security compliance, and depth of internal audit reports as well as compliance training and communication procedures • Evaluating, approving and regularly reviewing • Overseeing the development of the compliance the risk-based annual internal audit plan, focusing transformation programme on key areas of risk • Reviewing the Group’s tax-planning activities Oversee the work of • Supervising the external audit relationship • Analysing the Group’s hedging approach independent auditor and • Initiating and supervising a competitive external audit process Monitoring regular reports on material fraud cases and tender process • major litigation • Negotiating and agreeing the audit fee and scope • Making recommendations to the Board pursuant to the competitive tender process

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CORPORATE GOVERNANCE / CONTINUED Strategy Committee

The Strategy Committee’s principal role The Strategy Committee’s role, is to protect the interests of EuroChem’s responsibilities, composition and shareholders by monitoring the Group’s membership requirements are strategic development. The Committee documented in the Strategy Committee considers the strategic plans of the Regulations approved by the Board. They Group’s business divisions, major are available to view in the Corporate investment projects, M&A transactions Governance section of our website. and project management. It prepares required recommendations that fall within the terms of reference of the Board and are delegated by it to the Committee. SAMIR BRIKHO ACTING CHAIRMAN OF THE STRATEGY COMMITTEE

KEY PRIORITIES FOR 2021 STRATEGY COMMITTEE ACTIVITY IN 2020 COMMITTEE Key priorities Overview of activities MEMBERS Strategic development and Business process refinement Engage in developing the • Monitoring trends and economic signals with M&A activity Samir Brikho (IND) most appropriate strategic potential impacts on the business • Reviewing the implementation of the capital project ACTING CHAIRMAN direction and business • Guiding the strategic planning processes, following the management programme and the roll-out of the stage gate • Discussing and overseeing planning for various Andrey Melnichenko (NED) responses amid ongoing introduction of the EuroChem One Strategy processes for managing major capital projects economic scenarios and outcomes Stefan Judisch (NED) uncertainty, as well as a • Holding the two-day strategic workshop “Potential • Ensuring that appropriate governance processes are in comprehensive COVID-19 • Overseeing the effective and efficient use (REJOINED IN FEBRUARY 2021 AS Disruptors in the Fertilizer Industry: 2035 Scenarios” place to enable the timely review and implementation of a response of capital robust strategy across the short-, medium- and long-term COMMITTEE CHAIR) • Regularly reviewing the progress of key strategic initiatives, time horizons Steven Packebush (IND) • Developing a transparent mechanism for including the EuroChem Usolskiy and EuroChem VolgaKaliy prioritising projects based on an evaluation Michael Hogan (IND) potash projects, Kovdorskiy GOK and others • Reviewing the development progress of the new of what creates shareholder value and commercial operating model implementation risk • Reviewing financial strategies, major financial transactions and making relevant recommendations to the Board • Overseeing the design and implementation of a model • Considering and approving the results of the key of equilibrium pricing for the commodity fertilizer markets Oversee further delivery of • Overviewing organic growth, M&A and divestment projects strategic projects development through a gate high-priority strategic • Reviewing benefits of operational improvement initiatives review process, including the EuroChem Usolskiy projects and progress of M&A Performance review, budget execution and budget as part of the EuroChem Business System’s development, 6 and EuroChem VolgaKaliy potash projects, activities planning priorities for 2021-2022, as well as the roll-out of EuroChem Northwest 2 ammonia and urea meetings • Regularly reviewing the Group’s performance results (flash, operational efficiency improvements for all remaining project, and others management and CEO reports) and prospects divisions and core functions • Overseeing the development of the Brazil Roll-Up • Working with the management to address performance Strategy, Phosphate Strategy, Nitrogen and Gas shortfalls and opportunities Monetisation Strategy, Salt Strategy, as well as IOC monetisation opportunities • Reviewing the 2020 consolidated budget and progress on its execution Oversee implementation of • Overseeing the results of the new commercial the new commercial operating model’s implementation • Reviewing updated macro-economic parameters for and operating model, further approving the 2021 budget • Establishing the right governance structures and introduction of the major delivery models for the major capital projects, capital management including considering the Group’s organisational processes and structure and operating model required implementation of to optimise control and decision-making operational efficiency improvement initiatives • Reviewing the benefits of operational under the EuroChem improvement initiatives, the financial controller’s Business System impact validation results, EuroChem Business System priorities for 2021-2022, as well as the roll-out plan for all remaining divisions and core functions • Overseeing the work of the Operational Efficiency Committee

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CORPORATE GOVERNANCE / CONTINUED Nomination, Remuneration and Corporate Governance Committee

The Nomination, Remuneration and appointments, as well as succession Corporate Governance Committee planning for management roles. assists the Board in fulfilling its corporate The Nomination, Remuneration and governance responsibilities relating to Corporate Governance Committee’s role, remuneration and nomination matters. responsibilities, composition and It focuses on the Group’s overall membership requirements are remuneration and incentive framework, documented in the Nomination, remuneration packages for senior Remuneration and Corporate executives, strategic human resources Governance Committee Regulations policies, Board appointments, re- approved by the Board. They are elections and performance, directors’ available to view in the Corporate induction programmes and the ANDREY MELNICHENKO Governance section of our corporate continuing development and CHAIRMAN OF THE NOMINATION, website. endorsement of senior executives’ REMUNERATION AND CORPORATE GOVERNANCE COMMITTEE NOMINATION, REMUNERATION AND CORPORATE KEY PRIORITIES FOR 2021 GOVERNANCE COMMITTEE ACTIVITY IN 2020

COMMITTEE Key priorities Overview of activities Corporate governance HSE performance MEMBERS Reinforce the human • Overseeing the implementation of the updated • Overseeing the development of the corporate governance • Regularly reviewing HSE performance at Group companies, resources (HR) function, HR function transformation programme, as well project to align the Group to deliver the EuroChem business continuity and disaster preparedness plans, Andrey Melnichenko (NED) oversee the design and as the development of HR capabilities to support One Strategy as well as regular reports from the COVID-19 crisis CHAIRMAN implementation of the the business strategy management and response teams Samir Brikho (IND) function’s target state, as • Monitoring individual initiatives to develop the HR • Reviewing the current state of the governance framework well as the implementation of Steven Packebush (IND) function as part of the refreshed development and organisational design, as well as gaps and a • Overseeing the HSE function’s development programme the transformation roadmap change‑management plan programme, overseeing the development of • Overseeing the implementation of HSE business unit HR strategies and plans, as well • Reviewing the Committee’s mandate and endorsing improvement initiatives as driving business-corporate HR alignment its update to include the following terms of reference: • Fostering lessons learned and sharing root-cause analysis determining the optimal business model design, approving • Overseeing formation of a high-performing, investigation results well-integrated HR leadership team the Group’s top-level organisational structure and changes resulting from an operating model redesign, ensuring its Personnel strategy and incentive systems • Ensuring that there are proper governance alignment with the established business models and Focus on corporate • Assessing the results of the short-term incentive plans frameworks in place at various levels within the overseeing the progress of the Group-wide implementation governance structures, and reviewing 2021 short-term incentive targets for organisation, including reviewing decision-making of effective corporate governance models and tools 4 clarity about roles and key personnel authorities, organisational structures that define responsibilities at each • Reviewing and endorsing updates to the Regulations meetings and clarify roles and responsibilities, governance level, on the Board of Directors and Organisational Regulations Appointments and dismissals organisational design and reporting structures decision-making • Overseeing the design and structure of a long-term Regularly assessing the Board’s performance, evaluating authorities and powers • incentive programme, as well as guiding the development Board composition and diversity, as well as evaluating of major capital project incentive programmes Oversee talent development, • Overseeing the development of a high-quality the effectiveness and decision-making of the Board by succession planning and the succession plan to keep critical talent providing objective judgement and constructive challenge • Endorsing the HR budget for 2021 Group’s overall human in the pipeline to the management capital strategy • Endorsing appointments and incentives for key personnel • Reviewing the leadership needs and • Updating procedures for the performance evaluation of the Group, and agreeing dismissal and terms of training programmes of the Board and its Committees termination contracts with them

• Screening and recruiting candidates for Board Functional strategies and management leadership positions • Reviewing the HR function’s development strategy Contribute to the • Overseeing the implementation of the refreshed and transformation programme enhancement of the HSE HSE function’s development programme under • Reviewing the procurement function’s development function (together with the new Head of HSE, as well as the establishment strategy and transformation programme newly established HSE of long-term HSE goals, and evaluating Committee) EuroChem’s progress against them • Monitoring the Group’s HSE risk management processes with particular attention to risk management plans • Reviewing the effectiveness of and ensuring updates to the processes and systems necessary to safeguard compliance with HSE policies, rules and regulations

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INDEPENDENT AUDITOR’S REPORT REPORT OF THE STATUTORY AUDITOR to the General Meeting of EuroChem Group AG, Zug

REPORT19 DERIVATIVE ON THE AUDITFINANCIAL OF THE ASSETS CONSOLIDATED AND LIABILITIES FINANCIAL / CONTINUED STATEMENTS OPINION 31 December 2019 Financial We have audited the consolidated financial statements of EuroChem Group AG and its subsidiaries (the Group), which comprise Derivative assets Derivative liabilities 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED the19 consolidated DERIVATIVE statement FINANCIAL of financial position ASSETS as at 31 AND December LIABILITIES 2020 and the / consolidated CONTINUED(million statement US$) of profit or loss,(million US$) consolidatedOperating activities statement of comprehensive income, consolidated statement of cash flows and consolidated statement of changes 31 December 2019 in equity for the year then ended, and notes to the consolidated financial statements, including a31 summary December of2019 significant Statements Derivative assets Derivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities accounting policies. (million US$) (million US$) 2020 (million US$)– (million US$)2 Operating activities InOperating our opinion, activities the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2020 and its consolidated financial performance and its consolidated cash flows for the year then Commodity swaps and collars Commodity swaps and collars Derivative Derivative ended in accordance with the International Financial Reporting Standards (IFRS)Currency and comply pair Volume with Swiss(million law.assets (million liabilities 2020 – 2 2020 (sell/buy) US$)– US$) (million US$)2 BASIS FOR OPINION Operating activities Derivative Derivative We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss AuditingDerivative Standards.Derivative Currency pair Volume (million assets (million liabilities OurForeign responsibilities exchange non-deliverable under those provisions forward contracts, and standards net are further describedCurrency in the “Auditor’spair Volume responsibilities (million assets (million for the audiliabilitiest of (sell/buy) US$) US$) (million US$) the 2020 consolidated financial statements” section of our report. USD/RUB(sell/buy) US$) 135 US$)9 (million US$)– Operating activities Operating activities We2020 are independent of the Group in accordance with the provisions of Swiss lawBRL/USD and the requirements 33 of the Swiss– audit – Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net profession,Financing activities as well as the International Code of Ethics for Professional Accountants (including International Independence 2020 USD/RUB 135 9 – Standards)2020 of the International Ethics Standards Board for Accountants (IESBA Code),USD/RUB and we have fulfilled 135 our other9 ethical – Foreign exchange non-deliverable forward contracts, net 2020 BRL/USD 33 – – responsibilities2020 in accordance with these requirements. We believe that the auditBRL/USD evidence we have obtained 33 is sufficient– and – appropriate2020 to provide a basis for our opinion. USD/EUR 76 – 8 Financing activities 2020Financing activities BRL/USD 32 – 1 OUR AUDIT APPROACH Foreign exchange non-deliverable forward contracts, net 2021Foreign exchange non-deliverable forward contracts, net USD/EUR 80 – 7 2020 USD/EUR 76 – 8 Overview2020 Overall Group materiality: USD 55 million USD/EUR 76 – 8 Cross currency interest rate swaps, net 2020 BRL/USD 32 – 1 2020 • We conducted a full scope audit at 11 significantUSD/RUBBRL/USD reporting units 310 32audited by component– teams151 in 6 countries. 2021 USD/EUR 80 – 7 20212022 Materiality USD/RUBUSD/EUR 292 80 21– –7 Cross currency interest rate swaps, net Cross currency interest rate swaps, net• In addition we performed an audit of significant financial statement line items of 6 reporting 2023 units, with the involvement of component teamsUSD/RUB in 2 countries. 511 38 – 2020 USD/RUB 310 – 15 2020 USD/RUB 310 – 15 Total derivative financialAudit scope assets/liabilities• Our audit scope addressed 86% of the Group’s revenues and 88%– of the Group’s 68 total 33 2022 USD/RUB 292 21 – 2022 assets. USD/RUB 292 21 – The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: 2023 USD/RUB 511 38 – 2023 USD/RUB 511 38 – As key audit matter the following area of focus has been identified: Total derivative financial assets/liabilities – 68 33 Total derivative financialKey audit assets/liabilities 2020 – 68 33 matters • Impairment assessment of the potash mineGain/(loss) project, Gremyachinskoe in the Volgograd The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: region (the “Potash minerecognised project”), in and relatedfrom mineralother rights. 2020 other comprehensive 2020 Line in the consolidated Gain/(loss) MATERIALITY comprehensive incomeGain/(loss) to profit income or loss statement of profit or loss Gain/(loss) reclassified The scope of our audit was influenced by our application of materiality.Gain/(loss) Our auditreclassified opinion aims to provide reasonable assurance recognised in from other thatFinancing the consolidated activities financial statements are free from material recognised misstatement. in Misstatementsfrom other may arise due to fraud or error. They other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net comprehensive income to profit Line in the consolidated are considered material if, individually or in aggregate, they couldcomprehensive reasonably income be expected to profit to influence the economicLine in the decisions consolidated of income or loss statement of profit or loss usersCross takencurrency on interestthe basis rate of theswaps, consolidated net financial statements. income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss Financing activities FinancingOperating activitiesactivities Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net materialityForeign exchange for the consolidatednon-deliverable financial forward statements contracts, asnet a whole as set out(8) in the table below.8 Other These, operating together income/(expenses), with qualitative net Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net considerations,TotalCross currency interesthelped rateus to swaps, determine net the scope of our audit and the (16)nature,(3) timing and553 extent of ourOther audit financial procedures gain/(loss), and to net Operating activities evaluateOperating the activities effect of misstatements, both individually and in aggregate, on the consolidated financial statements as a whole. ​ During the year ended 31 December 2020, there was no material hedge ineffectiveness. 105ForeignIndependent exchange Auditors’ non-deliverable Report​ forward contracts, net (8) 8 Other operating income/(expenses), net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Overall Group materiality USD 55’000’000 110Total​ Consolidated Statement (16) 55 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 of Financial Position How we determined it 5% of profit before tax, adjusted for Financial foreign exchange gain/(loss), net; Changes in fair value of financial derivatives and Reassessment of liability from contingent consideration related to business 2020 During​ the year ended 31 December 2020, there was no material hedge ineffectiveness. During the year ended 31 December 2020, there was no material hedge ineffectiveness. 111 Consolidated Statement As at 1 January combination (Note 28) and Gain/(loss) from disposal of subsidiaries, net (Note 31). The adjustments – of Profit or Loss The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: EffectiveThe impact portion of cash of changesflow hedges in faireliminate of valueforeign theof currencycash potential flow risk hedgeseffect on changes of short-term in equity volatility was in as foreign follows: currency rates and normalize the 2020 (16) ​ 112 Consolidated Statement 2020 Transfer of changes in fair valueprofit of cash before flow tax hedges given tothe profit non-recurring or loss nature of the business combination and the disposal of 202055 of Comprehensive Income subsidiaries. As at 1 January – TaxAs at effect 1 January (5)– ​ Consolidated Statement Rationale for the materiality We chose profit before tax as the benchmark because, in our view, it is the benchmark against which 113Effective portion of changes in fair value of cash flow hedges (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) of Cash Flows benchmark applied the performance of the Group is most commonly measured by users, and is a generally accepted Transfer of changes in fair value of cash flow hedges to profit or loss 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 ​ Consolidated Statement benchmark. We chose 5% which is consistent with quantitative materiality thresholds used for profit- 114Tax effect (5) Tax effect (5) of Changes in Equity oriented companies in this sector. Total hedging reserve as at 31 December 34 Total hedging reserve as at 31 December 34 ​ Notes to the Consolidated 115 PricewaterhouseCoopers AG, Dammstrasse 21, Postfach, CH-6302 Zug, Switzerland Financial Statements Telefon: +41 58 792 68 00, Telefax: +41 58 792 68 10, www.pwc.ch

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EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 Strategic Report Corporate Governance Financial Statements

INDEPENDENT AUDITOR’S REPORT / CONTINUED REPORT OF THE STATUTORY AUDITOR to the General Meeting of EuroChem Group AG, Zug

AUDIT SCOPE IMPAIRMENT ASSESSMENT OF POTASH MINE PROJECT AND RELATED MINERAL RIGHTS 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated Key audit matter How our audit addressed the key audit matter financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the As at 31 December 2020, the carrying amount of We obtained the valuation model for Potash mine31 projectDecember (discounted 2019 cash flow industry in which the Group operates. Derivative assets Derivative liabilities non-current assets (property, plant and equipment, model) used by management to determine the(million recoverable US$) amount of the(million relevant US$) 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED construction19 DERIVATIVE in progress and FINANCIAL mineral rights) related ASSETS assets. AND We engaged LIABILITIES our internal / valuationCONTINUED experts to assist us in evaluating the As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated Operating activities financial statements. In particular, we considered where subjective judgements were made by management;31 December for 2019 example, in to potash mine project Gremyachinskoe in the methodology and assumptions used in the impairment31 December assessment 2019 described Commodity swaps and collars respect of significant accounting estimates that involved making assumptions and consideringDerivative future events assets that are inherentlyDerivative liabilities Volgograd region (the “Potash mine project”), is below. Derivative assets Derivative liabilities (million US$) (million US$) US$2020 1,848 million, including mineral rights of US$ (million US$)– (million US$)2 uncertain. We also addressed the risk of management override of internal controls, including among other matters consideration of Our audit procedures related to management’s assessment of non-current assets Operating activities 62Operating million. activities whether there was evidence of bias that represented a risk of material misstatement due to fraud. impairment of Potash mine project and related mineral rights included: Commodity swaps and collars Commodity swaps and collars Derivative Derivative The Group’s consolidated financial statements are prepared based on the financial information of its components, i.e. individual We continued to focus on the impairment – 2 • analysis of the methodologyCurrency used by pair management Volume (million for– theassets impairment (million test;liabilities2 companies2020 of the Group, and represent a consolidation of over 80 companies in over 20 countries comprising the Group’s assessment2020 of the Potash mine project and related (sell/buy) US$) US$) (million US$) • examination of the mathematical accuracy of the valuation model for the Potash operating business and head office functions. mineral Operating rights activities due to the significance of these Derivative Derivative assets to the consolidated financial statements mine project; Derivative Derivative For the purpose of the Group audit, the significance of components was assessed basedCurrency on pair the Volume component’s (million assets individual (million share liabilities (aboutForeign 21% exchange of total non-current non-deliverable assets forward at 31 contracts,• netassessment of key assumptionsCurrency such pair as Volumemacroeconomic (million assets forecasts: (million inflation liabilities rates, (sell/buy) US$) US$) (million US$) (sell/buy) US$) US$) (million US$) (more than 10%) of the Group’s revenue, expenses, total assets or total liabilities. If we considered a component to be significant, December2020 2020) and the subjective nature of foreign exchange rates, futureUSD/RUB market potash prices, 135 and those specific9 to the – we performedOperating activitiesa full scope audit, which involved an audit of its financial information based on the materiality level determined for judgementsOperating2020 activities and assumptions that management are Group: capital investments, salesBRL/USD volumes and discount 33 rate (weighted– average – the Foreigncomponent exchange in the contextnon-deliverable of the Group forward audit. contracts, In certain net cases, when additional audit evidence for the purpose of expressing requiredForeign exchangeto make in non-deliverable determining whether forward there contracts, are netcost of capital (WACC)) applied and whether these are in line with the approved our opinion on the consolidated financial statements was required, we performed audit procedures for individual financial Financing activities 2020 USD/RUB 135 9 – impairment2020 indicators and in performing an budget and strategy – the Group’sUSD/RUB Potash Strategy 135 for 2019 – 20239 and actual – statement line items and types of transactions on selected components of the Group. We selected these components for audit impairmentForeign exchange assessment, non-deliverable which are affected forward contracts,by the netdevelopment plan of the Potash mine project, external available and reliable 2020 BRL/USD 33 – – 2020 BRL/USD 33 – – procedures on individual balances and types of transactions separately for each financial statement line item included in the scope projected2020 future market and economic terms that sources (including macroeconomicUSD/EUR forecasts); 76 – 8 of ourFinancing audit, considering activities the level of audit evidence obtained from the audit of the financial information of significant components. are2020Financing inherently activities uncertain. • consideration of the accuracyBRL/USD of the budgeting process 32 by comparing,– on a 1 Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, netsample basis and with the benefit of hindsight, the budgets used in prior-year In the audit process, the group engagement team worked closely with component audit teams in Switzerland, Germany, Belgium, Management2021 considered the long-term USD/EUR 80 – 7 valuation models with the actual results of the current year; Russian2020 Federation, United States of America, Brazil and Lithuania. As part of providingUSD/EUR direction and supervision 76 over the– work of 8 developmentCross2020 currency period, interest requirements rate swaps, for net timely USD/EUR 76 – 8 • re-performance of sensitivity analysis around the key assumptions such as future the 2020component auditors, we determined the nature and extent of the audit proceduresBRL/USD for components of 32 the Group to –ensure that 1 completion2020 of project, possible delays in reaching BRL/USD 32 – 1 2020 market potash prices, discountUSD/RUB rate, sales volume, 310 capital investments,– foreign 15 we performed enough work to be able to give an opinion on the consolidated financial statements as a whole. full production capacity and license compliance as 2021 USD/EUR 80 – 7 2021 exchange rates and inflation USD/EURrates to ascertain the 80extent of change– in those 7 potential2022 impairment indicators as at 31 October USD/RUB 292 21 – For Crossthe purpose currency of interestour audit rate procedures swaps, net over certain complex and specific areas, we also engaged specialists in taxation, IFRS Cross currency interest rate swaps, net assumptions that either individually or collectively would be required for the 20202023 and therefore proceeded with a full USD/RUB 511 38 – application and experts in the valuation of non-current assets. non-current assets and mineral rights to be impaired; 2020 USD/RUB 310 – 15 impairment2020Total derivative assessment financial of theseassets/liabilities assets. USD/RUB 310– 68– 3315 Overall,2022 audit procedures performed at the level of significant components and otherUSD/RUB components of the 292 Group, including 21 testing – 2022 • obtaining management’s and BoardUSD/RUB of Directors’ written 292 representations 21 related to – ManagementThe impact of assessed cash flow the hedges risk of ofpossible foreign delays currency in riskthe on impairment comprehensive test including income their and position profit orin relationloss was to as the follows: partial water inflow and of selected2023 controls, detailed testing, analytical procedures and procedures on the consolidationUSD/RUB provided 511 us with a coverage 38 of – 2023 USD/RUB 511 38 – 86% of the Group’s total revenue and 88% of the Group’s total assets. the construction and development of the potash its effect for the overall development of the Potash mine project. Total derivative financial assets/liabilities – 68 33 depositTotal derivative resulting financialfrom the water assets/liabilities inflow at one of the 2020 – 68 33 Gain/(loss) By performing the procedures at components, combined with additional procedures at the Group level, we have obtained shafts at Gremyachinskoe field, and which may Our audit procedures in relation to management’s assessment of the risk of The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: sufficient and appropriate audit evidence regarding the financial information of the Group as a whole to provide a basis for our result in the risk of noncompliance with the terms of possible delaysrecognised in the inconstruction from andother development of the potash deposit, which opinion on the consolidated financial statements. 2020 the mining licenses and potential impairment of the may result in the riskother of non-compliancecomprehensive with2020 the terms of the mining licenses and Line in the consolidated Gain/(loss) potential impairmentcomprehensive of theincome relatedGain/(loss) to non-currentprofit assets and mineral rights, related non-current assets. income or loss statement of profit or loss KEY AUDIT MATTERS Gain/(loss) reclassified comprised: Gain/(loss) reclassified Key audit matters are those matters that, in our professional judgement,recognised were in of mostfrom significance other in our audit of the consolidated UnderFinancing the impairmentactivities assessment, management recognised in from other other comprehensive Foreign exchange non-deliverable forward contracts,• nettesting of complianceother(5) withcomprehensive the key terms44 of the licenses,Other including financial analysisgain/(loss), of net financial statements of the current period. These matters were addressedcomprehensive in the income context to profitof our audit of the consolidatedLine in thefinanc consolidatedial updated value in use model based on discounted comprehensive income to profit Line in the consolidated statements as a whole, and in forming our opinion thereon, and we do notincome provide a separateor loss opinion on these matters.statement of profit or loss cashCross flows currency (DCF). interest rate swaps, net supporting documentationincome(3) providedor loss 3by managementOther to confirm financialstatement that gain/(loss), ofall profit key datesor netloss and key terms stated in the licenses have been complied with, on a sample basis; Financing activities FinancingOperating activitiesactivities The Group’s management performed analysis of the • interviews with geologists responsible for the Potash mine project and discussion Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net business performance, industry outlook and of the stage of the mining processes, as well as the current estimate of reserves; Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net operationalTotalCross currency plans interest and calculated rate swaps, the recoverablenet (16)(3) 553 Other financial gain/(loss), net • obtaining confirmation from the management and the Board of Directors that they Operating activities amountsOperating of activitiesnon-current assets including mineral regularly monitor the status of the development stage of the Potash mine project, rights.During the year ended 31 December 2020, there was no material hedge ineffectiveness. Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Foreign exchange non-deliverable forward contracts, netthe company (EuroChem-VolgaKaliy,(8) 8 LLC) Other is ready operating to execute income/(expenses), the terms of the net Total (16) 55 ManagementTotalThe impact of has cash compared flow hedges the recoverable of foreign currency risklicenses on changes with respect in equity(16) to miningwas as conditions,follows:55 all required reports have been submitted on a timely basis and there have been no issues of non-compliance During the year ended 31 December 2020, there was no material hedge ineffectiveness. amountDuring theof non-current year ended assets 31 December related to 2020, the Potash there was no material hedge ineffectiveness. 2020 mineAs at project,1 January including mineral rights, determined with the terms of mining licenses. – The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: asThe the impact value ofin cashuse, withflow the hedges carrying of foreign amount currency of risk on changes in equity was as follows: Effective portion of changes in fair value of cash flowBased hedges on the above procedures, we found that the key assumptions and (16) these assets and concluded that no impairment 2020 Transfer of changes in fair value of cash flow hedgesjudgements to profit or usedloss for the assessment of impairment for the Potash mine project 2020in55 should be recognised in respect of the assets as at As at 1 January – As at 1 January the Volgograd region are reasonable, consistently applied and supported by the – 31Tax December effect 2020. (5) Effective portion of changes in fair value of cash flow hedges (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flowavailable hedges evidence. Finally, we compared the recoverable amount of the non- 34(16) Transfer of changes in fair value of cash flow hedges to profit or loss 55 ReferTransfer to Note of changes 2 ‘Basis in of fair preparation value of cash and flow hedgescurrent to profit assets or loss related to the Potash mine project, including mineral rights, 55 determined as their value in use, with the carrying amount of these assets. As a Tax effect (5) significantTax effect accounting policies’, 9 ‘Mineral rights’ (5) and Note 8 ‘Property, plant and equipment’ for result of the performed procedures we are satisfied that audit evidence obtained Total hedging reserve as at 31 December 34 moreTotal information.hedging reserve as at 31 December supports management’s assessment that no impairment is required. 34

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INDEPENDENT AUDITOR’S REPORT / CONTINUED REPORT OF THE STATUTORY AUDITOR to the General Meeting of EuroChem Group AG, Zug

OTHER INFORMATION IN THE ANNUAL REPORT We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned scope and The Board of Directors is responsible for the other information in the annual report. The other information comprises all information timing19 of DERIVATIVE the audit and significant FINANCIAL audit findings, ASSETS including AND any significantLIABILITIES deficiencies / CONTINUED in internal control that we identify during included in the annual report, but does not include the consolidated financial statements of EuroChem Group AG and our auditor’s our audit. 31 December 2019 report thereon. The annual report is expected to be made available to us after the date of this auditor’s report. Derivative assets Derivative liabilities 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED We19 also DERIVATIVE provide the Board FINANCIAL of Directors or itsASSETS relevant committee AND LIABILITIES with a statement / thatCONTINUED we have(million complied US$) with relevant ethical(million US$) Our opinion on the consolidated financial statements does not cover the other information in the annual report and we will not requirementsOperating activities regarding independence, and communicate with them all relationships and other matters that may reasonably be express any form of assurance conclusion thereon. 31 December 2019 thought to bear on our independence, and where applicable, actions taken to eliminate threats or31 safeguardsDecember 2019 applied. Derivative assets Derivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities In connection with our audit of the consolidated financial statements, our responsibility is to read (millionthe other US$) information in the(million US$) From2020 the matters communicated with the Board of Directors or its relevant committee, we determine(million US$) those– matters that were(million of US$) 2 annualOperating report whenactivities it becomes available and, in doing so, consider whether the other information is materially inconsistent with mostOperating significance activities in the audit of the consolidated financial statements of the current period and are therefore the key audit the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or Commodity swaps and collars Commodity swaps and collars Derivative Derivative based on the work we perform, we conclude that there is a material misstatement of this other information, we will be required to when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the – 2 Currency pair Volume (million– assets (million liabilities2 report2020 that fact. adverse2020 consequences of doing so would reasonably be expected to outweigh the(sell/buy) public interest benefitsUS$) of suchUS$) communication. (million US$) Operating activities RESPONSIBILITIES OF THE BOARD OF DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTSDerivative Derivative REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS Derivative Derivative The Board of Directors is responsible for the preparation of the consolidated financialCurrency statements pair Volume that (million give a trueassets and (million fair view inliabilities InForeign accordance exchange with non-deliverable article 728a paragraph forward contracts,1 item 3 CO net and Swiss Auditing StandardCurrency 890, pair we Volume confirm (million that assetsan internal (million control liabilities accordance with IFRS and the provisions of Swiss law, and for such internal control as (sell/buy)the Board of DirectorsUS$) determinesUS$) is (million US$) system 2020 exists which has been designed for the preparation of consolidated financialUSD/RUB(sell/buy) statements accordingUS$) 135 to the US$)instructions9 (million of US$) – necessaryOperating to enable activities the preparation of consolidated financial statements that are free from material misstatement, whether due to theOperating2020 Board ofactivities Directors. BRL/USD 33 – – fraudForeign or error. exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net WeFinancing recommend activities that the consolidated financial statements submitted to you be approved. In preparing2020 the consolidated financial statements, the Board of Directors is responsibleUSD/RUB for assessing the 135 Group’s ability9 to – 2020 USD/RUB 135 9 – PricewaterhouseCoopersForeign exchange non-deliverable AG forward contracts, net continue as a going concern, disclosing, as applicable, matters related to going concernBRL/USD and using the going 33 concern basis– of – BRL/USD 33 – – 2020 2020 USD/EUR 76 – 8 accountingFinancing unless activities the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative Financing activities but to do so. 2020 BRL/USD 32 – 1 Foreign exchange non-deliverable forward contracts, net 2021Foreign exchange non-deliverable forward contracts, net USD/EUR 80 – 7 AUDITOR’S2020 RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIALUSD/EUR STATEMENTS 76 – 8 2020 USD/EUR 76 – 8 Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from Cross currency interest rate swaps, net BRL/USD 32 – 1 JOANNE BURGENER MARIA KOTLYARENKO BRL/USD 32 – 1 material2020 misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable 2020 USD/RUB 310 – 15 AUDIT EXPERT assurance2021 is a high level of assurance, but is not a guarantee that an audit conductedUSD/EUR in accordance with 80 Swiss law, ISAs– and 7 20212022 USD/RUBUSD/EUR 292 80 21– –7 Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error AUDITOR IN CHARGE Cross currency interest rate swaps, net Cross2023 currency interest rate swaps, net USD/RUB 511 38 – and2020 are considered material if, individually or in the aggregate, they could reasonablyUSD/RUB be expected to influence 310 the economic– 15 2020 USD/RUB 310 – 15 decisions of users taken on the basis of these consolidated financial statements. Zug,Total 1 derivative February 2021financial assets/liabilities – 68 33 2022 USD/RUB 292 21 – 2022 USD/RUB 292 21 – Enclosure:The impact Consolidated of cash flow financial hedges statements of foreign (consolidated currency statement risk on ofcomprehensive financial position, income consolidated and statementprofit or lossof profit was or as loss, follows: consolidated statement of As part2023 of an audit in accordance with Swiss law, ISAs and Swiss Auditing Standards,USD/RUB we exercise professional 511 judgment 38 and – comprehensive2023 income, consolidated statement of cash flows, consolidated statement of changesUSD/RUB in equity and notes) 511 38 – maintain professional scepticism throughout the audit. We also: Total derivative financial assets/liabilities – 68 33 Total derivative financial assets/liabilities 2020 – 68 33 Gain/(loss) • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to recognised in from other provide a basis for our opinion. The risk of not detecting a material misstatement resulting from2020 fraud is higher than for one other comprehensive 2020 Line in the consolidated Gain/(loss) comprehensive incomeGain/(loss) to profit resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal income or loss statement of profit or loss control. Gain/(loss) reclassified Gain/(loss) reclassified recognised in from other Financing activities recognised in from other • Obtain an understanding of internal control relevant to the audit in orderother to designcomprehensive audit procedures that are appropriate in the Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net circumstances, but not for the purpose of expressing an opinioncomprehensive on the effectiveness income to ofprofit the Group’s internal control.Line in the consolidated comprehensive income to profit Line in the consolidated income or loss statement of profit or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related Financing activities FinancingOperating activitiesactivities disclosures made by the Board of Directors. Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net • Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Total (16) 55 Operating activities Operating activities the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw During the year ended 31 December 2020, there was no material hedge ineffectiveness. attentionForeign inexchange our auditor’s non-deliverable report to the forward related contracts, disclosures net in the consolidated(8) financial statements8 Other or, operating if such disclosuresincome/(expenses), are net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net inadequate,Total to modify our opinion. Our conclusions are based on the audit(16) evidence obtained55 up to the date of our auditor’s TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 report. However, future events or conditions may cause the Group to cease to continue as a going concern. During the year ended 31 December 2020, there was no material hedge ineffectiveness. During the year ended 31 December 2020, there was no material hedge ineffectiveness. 2020 • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and As at 1 January – whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) presentation. 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the GroupAs at to1 January express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and – TaxAs at effect 1 January (5)– performanceEffective portion of the of Group changes audit. in fair We value remain of cashsolely flow responsible hedges for our audit opinion. (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) Transfer of changes in fair value of cash flow hedges to profit or loss 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Tax effect (5) Tax effect (5) Total hedging reserve as at 31 December 34 Total hedging reserve as at 31 December 34

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF PROFIT OR LOSS AS AT 31 DECEMBER 2020 FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated) (all amounts are presented in millions of US dollars, unless otherwise stated)

31 December 31 December Note 2020 2019 Note 2020 2019 Sales19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED23 6,166 6,184 ASSETS Cost of sales 31 December24 2019(3,609) (3,810) Non-current assets: Derivative assets Derivative liabilities

Property, plant and equipment 8 7,668 8,191 (million US$) (million US$) 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED Gross19 profit DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED 2,557 2,374 Mineral rights 9 311 365 Operating activities 31 December 2019 31 December 2019 Goodwill Derivative10 assets 467 Derivative 469 liabilities Commodity swaps and collars Derivative assets Derivative liabilities (million US$) (million US$) Distribution costs (million US$)25 (1,018)(million US$) (913) Intangible assets 11 64 75 2020 – 2 Operating activities OperatingGeneral and activities administra tive expenses 26 (263) (242) Investment in associates and joint ventures 24 25 Other operating income/(expenses), net 27 71 (42) OriginatedCommodity loans swaps and collars 31 1 1 Commodity swaps and collars Derivative Derivative Currency pair Volume (million assets (million liabilities Restricted2020 cash 14 – 45 37 2 2020 (sell/buy) US$)– US$) (million US$)2 Operating profit 1,347 1,177 Derivative financial assets 19 12 59 Operating activities Deferred income tax assets 29 Derivative123 Derivative 76 Derivative Derivative Currency pair Volume (million assets (million liabilities ShareForeign of exchange profit/(loss) non-deliverable from associates forward and joint contracts, ventures, net net Currency pair Volume (million assets (million(1) liabilities1 Other non-current assets (sell/buy) US$) 35US$) (million 74 US$) (sell/buy) US$) US$) (million US$) Gain/(loss)2020 from disposal of subsidiaries, net USD/RUB 135 1909 – Total non-current assets 8,750 9,372 Operating activities InterestOperating2020 income activities BRL/USD 33 6– 10– Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net InterestFinancing expense activities (254) (175) Current assets: USD/RUB 135 9 – USD/RUB 135 9 – 2020 ForeignFinancial2020 exchange foreign exchange non-deliverable gain/(loss), forward net contracts, net (441) 168 Inventories 12 1,081 1,170 2020 BRL/USD 33 – – Other2020 financial gain/(loss), net BRL/USD28 33 (286)– 58– Trade receivables 13 493 444 2020 USD/EUR 76 – 8 Financing activities ProfitFinancing before activities taxation 561 1,239 Prepayments, other receivables and other current assets 13 624 336 2020 BRL/USD 32 – 1 Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net Income tax receivable 23 11 2021 USD/EUR 80 – 7 2020 USD/EUR 76 – 8 2020Income tax expense USD/EUR29 76 (66)– (223)8 Originated loans 31 30 – Cross currency interest rate swaps, net

Restricted2020 cash BRL/USD14 32 28 – 4 1 2020 USD/RUBBRL/USD 310 32 – 151 Profit 495 1,016 Derivative2021 financial assets USD/EUR19 80 59 – 9 7 2021 USD/EUR 80 – 7 2022 USD/RUB 292 21 – CashCross and cashcurrency equivalents interest rate swaps, net 14 546 313 Cross currency interest rate swaps, net Profit2023 attributable to: USD/RUB 511 38 – Total2020 current assets USD/RUB 310 2,884 – 2,287 15 2020 USD/RUB 310 – 15 OwnersTotal derivative of the parent financial assets/liabilities – 494 68 1,015 33 TOTAL2022 ASSETS USD/RUB 292 11,634 21 11,659 – 2022 USD/RUB 292 21 – Non-controllingThe impact of cash interests flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: 11 2023 USD/RUB 511 38 – 2023 USD/RUB 511 38 – 495 1,016 LIABILITIES AND EQUITY 2020 Total derivative financial assets/liabilities – 68 33 Total derivative financial assets/liabilities – 68 33 Equity attributable to owners of the parent: Gain/(loss) The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: EarningsThe impact per of share cash –flow basic hedges and diluted of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was30 as follows:0.55 1.06 Share capital 15 – – recognised in from other 2020 The accompanying notes on pages 115 to 162 are an integral part of these consolidatedother financial comprehensive statements. 2020 Treasury shares 15 (785) (785) Line in the consolidated Gain/(loss) comprehensive incomeGain/(loss) to profit income or loss statement of profit or loss Cumulative currency translation differences Gain/(loss) reclassified (2,646) (1,826) Gain/(loss) reclassified Hedging reserve recognised in from other 15 34 – Financing activities recognised in from other other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net Retained earnings and other reserves comprehensive income to profit 8,078Line in the consolidated 7,590 comprehensive income to profit Line in the consolidated income or loss 4,681statement of profit 4,979 or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss Non-controllingFinancing activities interests 2 2 FinancingOperating activitiesactivities TotalForeign equity exchange non-deliverable forward contracts, net (5) 44 Other 4,683financial gain/(loss), 4,981 net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net Operating activities Operating activities Non-current liabilities: During the year ended 31 December 2020, there was no material hedge ineffectiveness. BankForeign borrowings exchange and other non-deliverable loans received forward contracts, net (8) 8 Other operating16 income/(expenses),1,588 1,405 net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net ProjectTotal Finance (16) 55 17 433 435 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 BondsDuring issued the year ended 31 December 2020, there was no material hedge ineffectiveness. 18 1,869 1,661 During the year ended 31 December 2020, there was no material hedge ineffectiveness. 2020 Derivative financial liabilities 19 104 7 As at 1 January – The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: Deferred income tax liabilities 29 263 287 Effective portion of changes in fair value of cash flow hedges (16) Other non-current liabilities and deferred income 20 120 3112020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 TotalA snon-current at 1 January liabilities 4,377 4,106 – TaxAs at effect 1 January (5)– Effective portion of changes in fair value of cash flow hedges (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) CurrentTransfer liabilities: of changes in fair value of cash flow hedges to profit or loss 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 BankTax borrowings effect and other loans received 16 1,267 1,086 (5) Tax effect (5) ProjectTotal Finance hedging reserve as at 31 December 17 68 54 34 Total hedging reserve as at 31 December 34 Bonds issued 18 128 366 Derivative financial liabilities 19 28 26 Trade payables 22 527 508 Other accounts payable and accrued expenses 22 503 472 Income tax payable 18 20 Other taxes payable 35 40 Total current liabilities 2,574 2,572 Total liabilities 6,951 6,678 TOTAL LIABILITIES AND EQUITY 11,634 11,659 The accompanying notes on pages 115 to 162 are an integral part of these consolidated financial statements. 110 www.eurochemgroup.com EuroChem Annual Report and Accounts 2020 111 110 www.eurochemgroup.com EuroChem 2020Annual Annual Report Report and Accountsand Accounts 2020 147 111

EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 Strategic Report Corporate Governance Financial Statements

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020 FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated) (all amounts are presented in millions of US dollars, unless otherwise stated)

Note 2020 2019 Note 2020 2019 Profit 495 1,016 Operating19 DERIVATIVE profit FINANCIAL ASSETS AND LIABILITIES / CONTINUED 1,347 1,177 Income tax paid 31 December 2019 (120) (180) Derivative assets Derivative liabilities Other comprehensive income/(loss) that may be reclassified to profit or loss in Operating profit less income tax paid (million US$) 1,227(million 997US$) subsequent19 DERIVATIVE periods FINANCIAL ASSETS AND LIABILITIES / CONTINUED 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED Operating activities Currency translation differences 31 December 2019(827) 579 Depreciation and amortisation 31 December26 2019 441 389 Derivative assets Derivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities Effective portion of changes in fair value of cash flow hedges, net of deferred tax (million19 US$) (14) (million – US$) (Gain)/loss on disposals, impairment and write-off of property, plant and equipment, net (million US$) 13 (million US$)11 Transfer of changes in fair value of cash flow hedges to profit or loss, net of deferred tax 19 48 – 2020 – 2 Operating activities OperatingChange in provisionactivities for impairment of receivables (incl. ECL allowance) and provision for Share of other comprehensive income/(loss) of associates and joint ventures, net 1 (1) obsolete and damaged inventories, net (2) 5 Commodity swaps and collars Commodity swaps and collars Derivative Derivative Currency translation differences on disposed subsidiaries reclassified to profit or loss 31 6 – Other non-cash (income)/expenses, net (58) 76 2020 – 2 2020 Currency pair Volume (million– assets (million liabilities2 Total other comprehensive income/(loss) that may be reclassified to profit or loss in Gross cash flow (sell/buy) US$) 1,621US$) (million 1,478 US$) subsequent periods (786) 578 Operating activities Derivative Derivative Derivative Derivative Currency pair Volume (million assets (million liabilities ForeignCash proceeds/ exchange(pa non-deliverableyments) on operatin forwardg derivatives, contracts, net net Currency pair Volume (million assets (million(35) liabilities3

Other comprehensive income/(loss) that will not be reclassified to profit or loss in (sell/buy) US$) US$) (million US$) 2020 USD/RUB(sell/buy) US$) 135 US$)9 (million US$)– subsequentOperating periods activities OperatingChanges in activities operating assets and liabilities: Trade2020 receivables BRL/USD 33 (92–) (82–) RemeasurementsForeign exchange of post-employment non-deliverable benefitforward obligations, contracts, net net of tax (2) (3) Foreign exchange non-deliverable forward contracts, net AdvancesFinancing toactivities suppliers (17) – Change2020 in fair value of financial assets measured at fair value through other USD/RUB 135 9 – 2020 USD/RUB 135 9 – comprehensive income (4) – ForeignOther receivables exchange non-deliverable forward contracts, net (20) (62) 2020 BRL/USD 33 – – Inventories2020 BRL/USD 33 (19–) (109–) Total other comprehensive income/(loss) for the period that will not be reclassified to 2020 USD/EUR 76 – 8 Trade payables 63 (19) profitFinancing or loss in activities subsequent periods (6) (3) 2020Financing activities BRL/USD 32 – 1 Advances from customers 78 10 TotalForeign other comprehensiveexchange non-deliverable income/(loss) forward contracts, net (792) 575 Foreign exchange non-deliverable forward contracts, net Other2021 payables USD/EUR 80 18– 7 2020 USD/EUR 76 – 8 2020 USD/EUR 76 – 8 Total comprehensive income/(loss) (297) 1,591 CrossRestricted currency cash interest rate swaps, net (41) (36) 2020 BRL/USD 32 – 1 2020 BRL/USD 32 – 1 Net2020 cash – operating activities USD/RUB 310 1,556– 1,19015 Total2021 comprehensive income/(loss) attributable to: USD/EUR 80 – 7 20212022 USD/RUBUSD/EUR 292 80 21– –7 Owners of the parent (298) 1,590 Cross currency interest rate swaps, net Cross2023Cash flowscurrency from interest investin rateg activities swaps, net USD/RUB 511 38 – Non-controlling interests 1 1 Capital expenditure on property, plant and equipment and intangible assets (1,163) (937) 2020 USD/RUB 310 – 15 2020Total derivative financial assets/liabilities USD/RUB 310– 68– 3315 2022 USD/RUB 292 (297) 21 1,591 – Purchase2022 of mineral rights USD/RUB 292 21– (11–) OtherThe impact payments of cash related flow hedgesto mineral of riforeignghts currency risk on comprehensive income and profit or loss was as follows: (5) (2) The accompanying2023 notes on pages 115 to 162 are an integral part of these consolidated financial statements.USD/RUB 511 38 – 2023 USD/RUB 511 38 – Proceeds from sale of interest in associate 33 Total derivative financial assets/liabilities – 68 33 Total derivative financial assets/liabilities 2020 – 68 33 Acquisition of subsidiaries, net of cash acquired Gain/(loss) – (5) The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: DeferredThe impact com of pcashensation flow hedgesrelated toof businessforeign currency combination, risk on p aidcomprehensiveGain/(loss) incomereclassified and profit or loss was31 as follows:(241 ) – Proceeds from sale of property, plant and equipment recognised in from other 22 2020 other comprehensive 2020 Disposal of cash balances due to sale of subsidiaries Line (in10 the) consolidated– Gain/(loss) comprehensive incomeGain/(loss) to profit income or loss statement of profit or loss Gain/(loss) reclassified Cash proceeds/(payments) on derivatives, net Gain/(loss) reclassified (32) – recognised in from other NetFinancing chang eactivities in fixed-term deposits recognised in from other –2 other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net comprehensive income to profit Line in the consolidated Originated loans comprehensive income to profit 31 Line(152 in the) consolidated– income or loss statement of profit or loss ReCrosspay mentcurrency of ori interestginated rate loans swaps, net income(3) or loss3 Other31 financialstatement120 gain/(loss), of profit or netloss3 Financing activities FinancingInterestOperating received activitiesactivities 58 Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net ForeignOther investin exchangeg activities non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss),3 net 44 Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net NetTotalCross cash currency – investin interestg activities rate swaps, net (16)(3) 553 Other financial(1,470 gain/(loss),) (893 net) Operating activities Operating activities During the year ended 31 December 2020, there was no material hedge ineffectiveness. Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net FreeForeign cash exchange inflow/(outflow) non-deliverable forward contracts, net (8) 8 Other operating income/(expenses),86 297net

Total (16) 55 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 Cash flows from financing activities During the year ended 31 December 2020, there was no material hedge ineffectiveness. ProceedsDuring the from year bank ended borrowin 31 Decembergs and 2020,other loansthere receivedwas no material hedge ineffectiveness. 6 1,823 1,2582020 FundsAs at 1 received January under the Project Finance Facilities – 94– The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: ReEffectivepayment portion of bank of changes borrowin ings fair and value other of loans cash receivedflow hedges (1,443) (1,160(16)) 2020 ReTransferpayment of changesof Project in Finance fair value Facilit of cashy flow hedges to profit or loss 17 (66) 2020(5536) As at 1 January – TaxAProceedss at effect 1 January from bonds, net of transaction costs 470 1,507(5)– Effective portion of changes in fair value of cash flow hedges (16) TotalReEffectivepay hedgingment portion of bondsreserve of changes as at in31 fair December value of cash flow hedges (333) (97934(16)) Transfer of changes in fair value of cash flow hedges to profit or loss 55 PreTransfer paid andof changes additional in fairtransaction value of costscash flowrelated hedges to bank to profitborrowin or lossgs and bonds (14) 55(10) Tax effect (5) TaxPrep effectaid and additional transaction costs related to Project Finance Facilities (6) (5)(6) Total hedging reserve as at 31 December 34 TotalInterest hedging paid reserve as at 31 December (232) (21134) Cash proceeds/(payments) on derivatives, net 19 (22) 23 Purchase of treasury shares 15 – (785) Dividends paid to non-controlling interests in subsidiaries (1) – Payments of lease liabilities (11) (10) Other financial activities (5) (8) Net cash – financing activities 160 (323) Effect of exchange rate changes on cash and cash equivalents (13) (3) Net increase/(decrease) in cash and cash equivalents 233 (29) Cash and cash equivalents at the beginning of the period 14 313 342 Cash and cash equivalents at the end of the period 14 546 313 The accompanying notes on pages 115 to 162 are an integral part of these consolidated financial statements.

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EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 Strategic Report Corporate Governance Financial Statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated) (all amounts are presented in millions of US dollars, unless otherwise stated)

Attributable to owners of the parent Cumulative 191 THEDERIVATIVE EUROСHEM FINANCIAL GROUP ASSETS AND ITS AND OPERATIONS LIABILITIES / CONTINUED currency Retained Treasury translation Hedging earnings and Non-controlling The EuroСhem Group comprises the parent entity, EuroСhem Group AG (the “Company”) and its subsidiaries31 December (collectively2019 the “Group” shares differences reserve other reserves Total interests Total equity or “EuroChem Group”). The Company was incorporated under the laws of Switzerland on 16Derivative July 2014 assets and has its registeredDerivative office liabilities at: (million US$) (million US$) Balance19 at DERIVATIVE1 January 2019 FINANCIAL ASSETS– AND (2,404) LIABILITIES – / 6,578CONTINUED 4,174 – 4,174 Baarerstrasse,19 DERIVATIVE 37, 6300, Zug, FINANCIAL Switzerland. ASSETS AND LIABILITIES / CONTINUED Operating activities 31 December 2019 These consolidated financial statements were granted with approval and confirmed as accurate by31 the December Board 2019of Directors of the Derivative assets Derivative liabilities CompanyCommodity on swaps 1 February and collars 2021. Derivative assets Derivative liabilities Comprehensive income/(loss) (million US$) (million US$) 2020 (million US$)– (million US$)2 ProfitOperating activities – – – 1,015 1,015 1 1,016 AOperating company activities that holds business interests beneficially for Mr. Andrey Melnichenko indirectly owns 100% of AIM Capital S.E., registered in the Republic of Cyprus (31 December 2019: 100%), which in turn owns 90% of the share capital of EuroСhem Group AG (31 Commodity swaps and collars Commodity swaps and collars Derivative Derivative Other comprehensive income/(loss) December 2019: 90%). The remaining 10% of the share capital is held by a Group’sCurrency wholly-owned pair Volume subsidiary (million assets (Note (million 15) (31 Decemberliabilities 2020 – 2 20202019: 10%). (sell/buy) US$)– US$) (million US$)2 Currency translation differences – 579 – – 579 – 579 Operating activities Share of other comprehensive Derivative Derivative The Group’s principal activity is the production of mineral fertilizers (nitrogen-, potash- and phosphate-based) asDerivative well as mineralDerivative income/(loss) of associates and joint Currency pair Volume (million assets (million liabilities extractionForeign exchange (apatite, non-deliverablephosphate rock, forward iron-ore, contracts, baddeleyite net and potash), and the operationCurrency pairof a Volumedistribution (million network. assets (million The Group liabilities ventures, net – (1) – (sell/buy)– (1)US$) –US$) (million (1) US$) develops 2020 two potassium salts deposits in Perm and Volgograd region, potash productionUSD/RUB(sell/buy) at VerkhnekamskoeUS$) 135 depositUS$)9 (Perm (million region) US$)– RemeasurementsOperating activities of post-employment beganOperating2020 in 2018. activities The Group’s main production facilities are located in Russia, Lithuania,BRL/USD Belgium and Kazakhstan. 33 The Group’s– – benefitForeign obligations, exchange net non-deliverable of tax forward contracts,– net – – (3) (3) – (3) distributionForeign exchange assets arenon-deliverable located globally forward across contracts, Europe, net Russi a, North and Latin America, Central and South-East Asia. Financing activities Total2020 other comprehensive income/(loss) – 578 – USD/RUB(3) 575 135 – 9 575 – 2020 USD/RUB 135 9 – 2Foreign BASIS exchange OF non-deliverable PREPARATION forward contracts, AND SIGNIFICANT net ACCOUNTIN G POLICIES Total2020 comprehensive income/(loss) – 578 – BRL/USD1,012 1,590 33 1 – 1,591 – 2020 BRL/USD 33 – – Basis2020 of preparation. These consolidated financial statements have been preparedUSD/EUR in accordance with 76International Financial– 8 Transactions with owners Financing activities Reporting2020Financing Standardsactivities (“IFRS”) under the historical cost convention, as modified by theBRL/USD initial recognition 32of financial instrume– nts based1 Purchase of treasury shares (Note 15) (785) – – – (785) – (785) Foreign exchange non-deliverable forward contracts, net Foreignon fair value exchange and derivative non-deliverable financial forward instruments, contracts, which net are accounted for at fair value.USD/EUR 80 – 7 Acquisition of subsidiary – –– – – 1 1 2021 2020 USD/EUR 76 – 8 2020 USD/EUR 76 – 8 Total transactions with owners (785) –– –(785) 1 (784) CrossThe principal currency accounting interest rate policies swaps, applied net in the preparation of these consolidated financial statements are set out below. These 2020 BRL/USD 32 – 1 2020 BRL/USD 32 – 1 Balance at 31 December 2019 (785) (1,826) – 7,590 4,979 2 4,981 2020policies have been consistently applied to all periods presented, apart from the changesUSD/RUB in accounting 310 policies as described– below.15 2021 USD/EUR 80 – 7 2021 USD/EUR 80 – 7 Presentation.2022 All amounts in these consolidated financial statements are presentedUSD/RUB in millions of US dollars, 292 unless otherwise 21 stated,–

Cross currency interest rate swaps, net Crossthus2023 some currency amounts interest may rate be notswaps, disclosed net being less than US$1 million. The presentationUSD/RUB of comparatives 511 was changed 38 accordingly.– Balance2020 at 1 January 2020 (785) (1,826) – USD/RUB7,590 4,979 310 2 – 4,981 15 2020 USD/RUB 310 – 15 ApplicationTotal derivative of hedge financial accounting. assets/liabilities Starting 2020, the Group applied prospectively hedge accounting requirements– of 68 IFRS 9 33 2022 USD/RUB 292 21 – 2022 USD/RUB 292 21 – "FinancialThe impact instruments". of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: Comprehensive2023 income/(loss) USD/RUB 511 38 – 2023 USD/RUB 511 38 – The Group's derivative instruments comprise forward and swap contracts, commodity swaps and collars, freight swaps that can be ProfitTotal derivative financial assets/liabilities – – – 494 494 – 1 68495 33 Total derivative financial assets/liabilities 2020 – 68 33 used as cash flow hedges. Derivative instruments designated as cash flow hedges are disclosed in Note 19. The Group does not have Gain/(loss) The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: fairThe value impact hedges. of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: recognised in from other Other comprehensive income/(loss) 2020 Hedge effectiveness is determined at the inception of the hedge relationshipother andcomprehensive on the ongoing 2020 basis to ensure that economic Line in the consolidated Currency translation differences – (827) – Gain/(loss)– (827) – (827) comprehensive incomeGain/(loss) to profit relationship exists between the hedging instrument and hedged item.income or loss statement of profit or loss Effective portion of changes in fair value of Gain/(loss) reclassified Gain/(loss) reclassified recognised in from other Financing activities recognised in from other cash flow hedges, net of deferred tax – – (14) – (14) – (14) Changes in the fair value of effective hedging instruments are recognised in other comprehensive income and accumulated within a other comprehensive hedgingForeign exchangereserve in non-deliverable equity. Any cumulative forward gain contracts, or loss net on the hedging otherinstrument(5) comprehensive is reclassified44 to profitOther or loss financial (to "Other gain/(loss), operating net Transfer of changes in fair value of cash comprehensive income to profit Line in the consolidated comprehensive income to profit Line in the consolidated income/(expenses), net" or "Other financial gain/(loss), net", depending on cash flows being hedged), when the opposite effect arises flow hedges to profit or loss, net of income or loss statement of profit or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss from the hedge item. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. deferredFinancing tax activities – – 48 – 48 – 48 FinancingOperating activitiesactivities ShareForeign of other exchange comprehensive non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net ChangesForeign exchange in the fair non-deliverable value of derivative forward financial contracts, instruments net to which hedge(5)(8) accounting is44 8not Otherapplied operating areOther recognised financialincome/(expenses), immediate gain/(loss),ly netin income/(loss)Cross currency of associates interest andrate jointswaps, net (3) 3 Other financial gain/(loss), net profitTotalCross orcurrency loss. interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net ventures,Operating net activities – 1 – – 1 – 1 Operating activities FunctionalDuring the yearand presentationended 31 December currency. 2020, The there functional was no currency material of hedge each of ineffectiveness. the Group’s entities is the currency of the primary CurrencyForeign translation exchange differences non-deliverable on forward contracts, net (8) 8 Other operating income/(expenses), net economicForeign exchange environment non-deliverable in which the forward entity operates. contracts, net (8) 8 Other operating income/(expenses), net disposedTotal subsidiaries reclassified to to (16) 55 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 profit or loss – 6 – – 6 – 6 While the Company’s functional currency is the US dollar (“US$”), the functional currency for each of the Group’s subsidiaries is 2020 ChangeDuring in fairthe valueyear ended of financial 31 December assets 2020, there was no material hedge ineffectiveness. determinedDuring the year separately. ended 31The December functional 2020, curren therecy of was subsidiaries no material located hedge in ineffectiveness.Russia is the Russian rouble (“RUB”); the functional currency As at 1 January – measured at fair value through other of subsidiaries located in the Eurozone is the Euro (“EUR”), the functional currency of subsidiaries in North America and in Switzerland The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: (16) comprehensive income – – – (4) (4) – (4) Effectivecarrying tradingportion activities of changes is the in fairUS$. value of cash flow hedges 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 Remeasurements of post-employment Monetary assets and liabilities are translated into each entity’s functional currency at the official exchange rate at the respective As at 1 January – As at 1 January – benefit obligations, net of tax – – – (2) (2) – (2) Taxreporting effect dates. Foreign exchange gains and losses resulting from the settlement of the transactions and from the translation of (5) (16) (16) TotalEffective other comprehensive portion of changes income/(loss) in fair value of cash flow– hedges(820) 34 (6) (792) – (792) TotalEffectivemonetary hedging portion assets reserve ofand changes liabilities as at in31 intofair December valueeach enof tity’scash functionalflow hedges currency at year-end official exchange rates are recognised in profit or 34 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Total comprehensive income/(loss) – (820) 34 488 (298) 1 (297) loss. Translation differences on non-monetary financial assets such as equities classified as financial instruments measured at fair Tax effect (5) Tax effect (5) Transactions with owners value through other comprehensive income are recognised in other comprehensive income. DividendsTotal hedging paid to non-controlling reserve as at 31 interests December 34 TotalForeign hedging exchange reserve gains as and at 31losses December that relate to cash and cash equivalents, bank borrowings, third party loans, intragroup loans, 34 in subsidiaries – – – – – (1) (1) bonds issued and deposits are presented in the consolidated statement of profit or loss in a separate line “Financial foreign exchange Total transactions with owners – – – – – (1) (1) gain/(loss), net”. All other foreign exchange gains and losses mainly arising on working capital and operating derivative financial Balance at 31 December 2020 (785) (2,646) 34 8,078 4,681 2 4,683 instruments (Note 19) are presented in the consolidated statement of profit or loss within “Other operating income/(expenses), net”. The accompanying notes on pages 115 to 162 are an integral part of these consolidated financial statements. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

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EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 192 BASISDERIVATIVE OF PREPARATION FINANCIAL ASSETS AND SIGNIFICA AND LIABILITIESNT ACCOUNTING / CONTINUED POLICIES / CONTINUED The presentation currency of the Group is the US$ since the management considers the US$ to be more appropriate for the At each reporting date management assesses whether there is any indication of impairment of property,31 December plant 2019 and equipment. If any understanding and comparability of consolidated financial statements. The results and financial position of each of the Group’s such indication exists, management estimates the recoverable amount, which is determinedDerivative as the higher assets of an asset’sDerivative fair value liabilities less subsidiaries were translated to the presentation currency as required by IAS 21 “The Effects of Changes in Foreign Exchange Rates”: costs of disposal and its value in use. The carrying amount is reduced to the recoverable amount(million and US$)the impairment loss is(million US$) 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED recognised19 DERIVATIVE in profit or loss. FINANCIAL An impairment loss ASSETS recognised AND for an LIABILITIES asset in prior years / CONTINUED is reversed if there has been a change in (i) assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate at the date Operating activities 31 December 2019 the estimates used to determine the asset’s value in use or fair value less costs of disposal. 31 December 2019 of that consolidated statement of financial position; Derivative assets Derivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities (million US$) (million US$) Gains and losses on disposals determined by comparing proceeds with carrying amount are recognised(million US$) in profit or loss. (million US$) (ii) income and expenses for each consolidated statement of profit or loss are translated at monthly average exchange rates (unless 2020 – 2 Operating activities Operating activities this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which Capitalisation of borrowing costs. General and specific borrowing costs directly attributable to the acquisition, construction or caseCommodity income swaps and expenses and collars are translated at the dates of the transactions); productionCommodity of swaps assets and that collars necessarily take a substantial time to get ready for intended use or sale (qualifying assets)Derivative are capitalisedDerivative as 2020 – 2 2020part of the costs of those assets. The commencement date for capitalisation is whenCurrency (a) the pair Group Volume incurs (million– expenditures assets (million for the liabilities2 (iii) components of equity are translated at a historical rate; and (sell/buy) US$) US$) (million US$) qualifying asset; (b) it incurs borrowing costs; and (c) it undertakes activities that are necessary to prepare the asset for its intended Operating activities (iv) all resulting exchange differences are recognised as currency translation differences in other comprehensive income.Derivative Derivative use or sale. Capitalisation of borrowing costs continues up to the date when the assets are substantially ready forDerivative their use orDerivative sale. Currency pair Volume (million assets (million liabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million assets (million liabilities The Group capitalises borrowing costs that could have been avoided if it had not made capital expenditure on qualifying assets. At 31 December 2020, the official exchange rates were: US$ 1 = RUB 73.8757, US$ 1 = EUR(sell/buy) 0.8147 (31 DecemberUS$) 2019: US$US$) 1 = (millionRUB US$) 2020 USD/RUB(sell/buy) US$) 135 US$)9 (million US$)– 61.9057,Operating US$ 1 activities= EUR 0.8928). Average rates for the year ended 31 December 2020 were: US$ 1 = RUB 72.1464, US$ 1 = EUR 0.8750 OperatingBorrowing costsactivities capitalised are calculated at the Group’s average funding cost (the weighted average interest cost is applied to the (2019: US$ 1 = RUB 64.7362, US$ 1 = EUR 0.8929). expenditures2020 on the qualifying assets), except to the extent that funds are borrowedBRL/USD specifically for the 33purpose of obtaining– a – Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net qualifyingFinancing asset.activities Where this occurs, actual borrowing costs incurred less any investment income on the temporary investment of Consolidated2020 financial statements. Subsidiaries are entities (including structured entities)USD/RUB over which the 135Group has control.9 The – those2020 borrowings are capitalised. USD/RUB 135 9 – Foreign exchange non-deliverable forward contracts, net Group2020 controls an entity when the Group is exposed to, or has rights to, variable returnsBRL/USD from its involvement 33 with the entity– and has – 2020 BRL/USD 33 – – the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control Depreciation.2020 Land as well as assets under construction is not depreciated. DepreciationUSD/EUR of other items 76 of property, plant– and 8 is transferredFinancing to activities the Group (acquisition date) and are de-consolidated from the date that control ceases. equipment2020Financing activities(other than oil and gas and mining assets) is calculated using the straight-lineBRL/USD method to allocate 32 their cost –to their residual1 Foreign exchange non-deliverable forward contracts, net valuesForeign over exchange their estimated non-deliverable useful lives forward from contracts, the time theynet are ready for use: The acquisition method of accounting is used to account for business combinations. The Group determines whether a transaction is a 2021 USD/EUR 80 – 7 business2020 combination based on the fact that the assets acquired and liabilities assumedUSD/EUR constitute a business. 76 A business– is an 8 Cross 2020 currency interest rate swaps, net USD/EUR 76 Useful– lives in years8 Depreciation method (for straight-line method) integrated2020 set of activities and assets that is capable of being conducted and managedBRL/USD for the purpose of providing 32 goods– or 1 2020 BRL/USD 32 – 1 Buildings2020 and land improvements straight-line/unit-of-productionUSD/RUB 310 – 15 to 8515 services2021 to customers, generating investment income or generating other income fromUSD/EUR ordinary activities. Identifiable 80 assets– acquired 7 2021 USD/EUR 80 – 7 Transfer2022 devices straight-line/unit-of-productionUSD/RUB 292 21 25 to 50– and Crossliabilities currency and contingent interest rate liabilities swaps, assumed net in a business combination are measured at their fair values at the acquisition date, Cross currency interest rate swaps, net irrespective of the extent of any non-controlling interest. The Group measures non-controlling interest on a transaction-by-tra nsaction Machinery2023 and equipment USD/RUBstraight-line 511 38 2 to 35– 2020 USD/RUB 310 – 15 2020 USD/RUB 310 – 15 basis, either at: (a) fair value, or (b) the non-controlling interest’s proportionate share of net assets of the acquiree. TransportTotal derivative financial assets/liabilities straight-line – 685 to 3340 2022 USD/RUB 292 21 – 2022 USD/RUB 292 21 – Goodwill is measured by deducting the net assets of the acquiree from the aggregate of the consideration transferred for the OtherThe impact items of cash flow hedges of foreign currency risk on comprehensive income and profitstraight-line or loss was as follows: 1 to 15 2023 USD/RUB 511 38 – 2023 USD/RUB 511 38 – acquiree, the amount of non-controlling interest in the acquiree and fair value of an interest in the acquiree held immediately before Total derivative financial assets/liabilities – 68 33 DepreciationTotal derivative of oil financial and gas assets/liabilities and mining assets is calculated using the unit-of-production method. 2020 – 68 33 the acquisition date. Any negative amount (“negative goodwill” or “bargain purchase”) is recognised in profit or loss, after Gain/(loss) The residual value of an asset is the estimated amount that the Group would currently obtain from disposing of the asset less the managementThe impact reassesses of cash flow whether hedges it identifiedof foreign allcurrency the assets risk acquon comprehensiveired and all liabilities income and and contingent profit or loss liabilities was as assumed follows: and reviews The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: the appropriateness of their measurement. estimated costs of disposal, if the asset were already of the agerecognised and in the in conditionfrom expected other at the end of its useful life. The 2020 residual value of an asset is nil if the Group expects to use the asset untilother the endcomprehensive of its physical 2020 life. The assets’ residual values and Line in the consolidated The consideration transferred for the acquiree is measured at the fair value of the assetsGain/(loss) given up, equity instruments issued and comprehensive incomeGain/(loss) to profit useful lives are reviewed, and adjusted if appropriate, at each reportingincome date. or loss statement of profit or loss liabilities incurred or assumed, including fair value of assets or liabilitiesGain/(loss) from contingent reclassified consideration arrangements but excluding Gain/(loss) reclassified acquisition related costs such as advisory, legal, valuation and similarrecognised professional in services.from other Transaction costs related to the FinancingRemaining activities useful life of property, plant and equipment. Management recognised assesses in thefrom remaining other useful life of property, plant and other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net acquisition and incurred for issuing equity instruments are deductedcomprehensive from equity; transactionincome to profit costs incurred for issuingLine debt in the as consolidated part of equipment in accordance with the current technical conditions comprehensive of assets and theincome estimated to profit period during which theseLine in assets the consolidated will the business combination are deducted from the carrying amount of the incomedebt and all otheror transaction loss costs associatedstatement with ofthe profit or loss Crossbring economic currency interestbenefit torate the swaps, Group. net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss acquisitionFinancing are activities expensed. Financing activities DevelopmentOperating activities expenditures. Development expenditures incurred by the Group are capitalised and accumulated separately in the Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated; unrealised assetsForeign under exchange construction non-deliverable category forward for each contracts, area of interest net in which economically(8) recoverable8 Other resources operating have income/(expenses), been identified. Such net lossesCross are currency also eliminated interest unless rate swaps, the cost net cannot be recovered. (3) 3 Other financial gain/(loss), net expendituresTotalCross currency comprise interest costrate swaps,directly netattributable to the construction of a (16)mine(3) and the related553 infrastructure.Other financial gain/(loss), net Operating activities Operating activities The Company and all of its subsidiaries use uniform accounting policies consistent with the Group’s policies. StrippingDuring the costs. year endedThe Group 31 December separates 2020, two types there of was stripping no material costs hedge related ineffectiveness. to mining activity: a) stripping activity asset; and b) current Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net stripping costs. Stripping costs incurred to obtain an access to the ore body during the pre-production phase or improve access to Non-controllingTotal interest is that part of the net results and of the equity of a subsidiary(16) attributable55 to interests which are not owned, furtherTotalThe impact quantities of cash of flow minerals hedges are of capitalised foreign currency into stripping risk on ac changestivity asset in equity within(16) was“Property, as follows:55 plant and equipment” which is subsequently directly or indirectly, by the Company. Non-controlling interest forms a separate component of the Group’s equity. During the year ended 31 December 2020, there was no material hedge ineffectiveness. amortisedDuring the overyear theended life of31 theDecember mine. Current 2020, therestripping was costs no material incurred hedge in order ineffectiveness. to mine mineral ore only in current period are expensed2020 Purchases and sales of non-controlling interests. The Group applies the economic entity model to account for transactions with Aass incurredat 1 January and presented in profit or loss within “Cost of sales”. – The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: owners of non-controlling interest that do not result in a loss of control. Any difference between the purchase consideration and the EffectiveExploration portion assets. of changes Exploration in fair and value evaluation of cash costs flow relatedhedges to an area of interest are written off as incurred except they are carried(16) carrying amount of non-controlling interest acquired is recorded as a capital transaction directly in equity. The Group recognises the 2020 Transferforward as of anchanges asset inin thefair consolidatedvalue of cash statement flow hedges of financialto profit orpo sitionloss if the rights of the area of interest are current and it is 202055 differenceAs at 1 betweenJanuary sales consideration and carrying amount of non-controlling interest sold as a capital transaction in the – TaxAconsidereds at effect 1 January probable that the costs will be recouped through successful development and exploitation of the area of interest. (5)– consolidated statement of changes in equity. Effective portion of changes in fair value of cash flow hedges (16) TotalEffectiveCapitalised hedging portion costs reserve of include changes as costs at in31 fair directlyDecember value related of cash to flow exploration hedges and evaluation activities in the relevant area of interest. In accordance34(16) DisposalsTransfer of ofsubsidiaries changes in and fair valueassociates. of cash When flow hedgesthe Group to profitceases or to loss have control or significant influence, any retained interest is 55 Transferwith IFRS of 6, changes “Exploration in fair for value and ofEvaluation cash flow of hedges Mineral to Resour profit ces”,or loss exploration assets are measured applying the cost model 55 described in IAS 16, “Property, Plant and Equipment” after initial recognition. Depreciation and amortisation are not calculated for remeasuredTax effect to its fair value at the date when control or significant influence is lost, with the change in carrying amount recognised in (5) Tax effect (5) profit or loss. exploration assets until the production phase because the economic benefits that the assets represent are not consumed until that Total hedging reserve as at 31 December 34 Totalmoment. hedging Capitalised reserve exploration as at 31 December and evaluation expenditure is written off where the above conditions are no longer satisfied. 34 Property, plant and equipment. Property, plant and equipment are stated at historical cost, less accumulated depreciation and a provision for impairment, where required. All capitalised exploration and evaluation expenditures are assessed for impairment if facts and circumstances indicate that impairment may exist. Exploration and evaluation assets are also tested for impairment once commercial reserves are found, before Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is the assets are transferred to development properties. probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The cost of replacing major parts or components of property, plant and equipment items is capitalised and the replaced part is retired. Minor repair and maintenance costs are expensed when incurred.

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EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 192 BASISDERIVATIVE OF PREPARATION FINANCIAL ASSETS AND SIGNIFICA AND LIABILITIESNT ACCOUNTING / CONTINUED POLICIES / CONTINUED Leases. The Group assesses whether a contract is a lease based on the fact that the Group obtains the right to control the use of an The Group tests intangible assets for impairment whenever there are indications that intangible assets31 December may be 2019 impaired. underlying asset for a period of time in exchange for consideration. Lease contracts are mainly represented by the land lease If impaired, the carrying amount of intangible assets is written down to the higher of value inDerivative use and assets fair value less costDerivative of disposal. liabilities contracts.19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED(million US$) (million US$) Assets that are subject to depreciation and amortisation are reviewed for impairment whenever Right-of-use assets. The Group recognises a right-of-use asset and a corresponding lease liability at the commencement date of the OperatingImpairment activities of non-financial assets. 31 December 2019 events or changes in circumstances indicate that the carrying amount may not be recoverable. Prior31 impairmentsDecember 2019 of non-financial lease. The right-of-use asset is initially measured at cost comprising of the lease liability, lease paymentsDerivative assets made at or beforeDerivative the liabilities Commodity swaps and collars Derivative assets Derivative liabilities assets (other than goodwill) are reviewed for possible reversal at each reporting date. commencement date, any initial direct costs and other lease related costs. (million US$) (million US$) 2020 (million US$)– (million US$)2 Operating activities Operating activities Fair value is the price that would be received to sell an asset or paid to transfer a The right-of-use asset is depreciated on a straight-line basis from the commencement date to the earlier of: the end of the useful life Financial instruments – key measurement terms. liability in an orderly transaction between market participants at the measurement date. The best evidence of fair value is the price in of theCommodity underlying swaps asset and or the collars end of the lease term. The lease term may include periods covered by an option to extend (or Commodity swaps and collars Derivative Derivative an active market. An active market is one in which transactions for the asset or liabilityCurrency take pair place Volume with (million sufficient assets frequency (million andliabilities terminate)2020 the lease, whenever the lease is reasonably certain to be extended (or not terminated). Management– assesses extension 2 2020 – 2 volume to provide pricing information on an ongoing basis. (sell/buy) US$) US$) (million US$) and termination options of the leases on a regular basis. Operating activities Derivative Derivative Fair value of financial instruments traded in an active market is measured as the product of the quoted price forDerivative the individua lDerivative asset or The right-of-use asset is subject to testing for impairment, whenever there are indications that the asset may be impaired. Currency pair Volume (million assets (million liabilities liabilityForeign and exchange the number non-deliverable of instruments forward held contracts,by the entity. net This is the case even if Currencya market’s pair normalVolume daily(million trading assets volume (million is not liabilities (sell/buy) US$) US$) (million US$) (sell/buy) US$) US$) (million US$) Right-of-use assets are presented within “Property, plant and equipment” in the consolidated statement of financial position. sufficient2020 to absorb the quantity held and placing orders to sell the position in a singleUSD/RUB transaction might 135 affect the quoted9 price. The– Operating activities Operatingquoted market activities price used to value financial assets is the current bid price; the quoted market price for financial liabilities is the current The payments related to short-term leases (with a lease term of 12 months or less) as well as leases of low-value assets are 2020 BRL/USD 33 – – Foreign exchange non-deliverable forward contracts, net Foreignasking price. exchange non-deliverable forward contracts, net recognised as an expense in the consolidated statement of profit or loss as incurred over the period of the lease. Financing activities 2020 USD/RUB 135 9 – Valuation2020 techniques such as discounted cash flow models or models based on recentUSD/RUB arm’s length transactions 135 or consideration9 of– Lease liabilities. The lease liability is initially measured at the present value of fixed lease payments that are not paid at the Foreign exchange non-deliverable forward contracts, net 2020 BRL/USD 33 – – financial2020 data of the investees are used to measure fair value of certain financial instrumentsBRL/USD for which external 33 market– pricing – commencement date. Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily 2020 USD/EUR 76 – 8 information is not available. determined,Financing the activities lessee’s individual incremental borrowing rate is used. 2020Financing activities BRL/USD 32 – 1 Foreign exchange non-deliverable forward contracts, net FairForeign value exchange measurements non-deliverable are analysed forward by level contracts, in the netfair value hierarchy as follows: (i) level one are measurements at quoted The lease liability is subsequently remeasured in case of change in the lease term, lease modification or revised lease payments. 2021 USD/EUR 80 – 7 prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all 2020 USD/EUR 76 – 8 2020 USD/EUR 76 – 8 materialCross currency inputs observableinterest rate for swaps, the asset net or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and Current2020 portion of lease liabilities is included in “Other accounts payable and accrued expenses”BRL/USD and non-current 32 portion –is included 1 2020 BRL/USD 32 – 1 in “Other non-current liabilities and deferred income” of the consolidated statement of financial position. (iii)2020 level three measurements are valuations not based on solely observable marketUSD/RUB data (that is, the measurement 310 requires– 15 2021 USD/EUR 80 – 7 significant20212022 unobservable inputs). USD/RUBUSD/EUR 292 80 21– –7 Goodwill is carried at cost less accumulated impairment losses, if any. The Group tests goodwill for impairment at least Goodwill.Cross currency interest rate swaps, net Cross currency interest rate swaps, net annually and whenever there are indications that goodwill may be impaired. The carrying value of CGU containing goodwill is Transaction2023 costs are incremental costs that are directly attributable to the acquisition,USD/RUB issue or disposal 511 of a financial 38 instrument. An– 2020 USD/RUB 310 – 15 2020 USD/RUB 310 – 15 compared to the relevant amount, which is the higher of value in use and the fair value less cost of disposal. Any impairment is incrementalTotal derivative cost financialis one that assets/liabilities would not have been incurred if the transaction had not taken place. Transaction– costs include 68 fees and 33 recognised2022 immediately as an expense and is not subsequently reversed. Goodwill is USD/RUBallocated to the cash-generating 292 units, 21 or – commissions2022 paid to agents (including employees acting as selling agents), advisors,USD/RUB brokers and dealers, 292 levies by regulatory 21 – The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: groups2023 of cash-generating units, that are expected to benefit from the synergies of theUSD/RUB business combination. 511 Such units 38or groups of – agencies2023 and securities exchanges, and transfer taxes and duties. Transaction costsUSD/RUB do not include debt 511 premiums or 38 discounts, – unitsTotal represent derivative the lowest financial level assets/liabilities at which the Group monitors goodwill and are not larger than an operating segment.– 68 33 financingTotal derivative costs or financial internal assets/liabilitiesadministrative or holding costs. 2020 – 68 33 Gain/(loss) GainsThe or impact losses ofon cash disposal flow ofhedges an operation of foreign within currency a cash risk generating on comprehensive unit to which income goodwill and hasprofit been or loss allocated was as include follows: the carrying AmortisedThe impact cost of cash is the flow amount hedges at whichof foreign the financialcurrency instrumentrisk on comprehensive wasGain/(loss) recognised income at reclassifiedinitial and recognitionprofit or loss less was any as principalfollows: repayments, amount of goodwill associated with the operation disposed of, generally measured on the basis of the relative values of the operation plus accrued interest, and for financial assets less any allowancerecognised for expected in creditfrom losses other (“ECL”). Accrued interest includes 2020 other comprehensive 2020 disposed of and the portion of the cash-generating unit which is retained. amortisation of transaction costs deferred at initial recognition and of any premium or discount to the maturity amountLine in using the consolidated the Gain/(loss) comprehensive incomeGain/(loss) to profit effective interest method. Accrued interest income and accrued interestincome expense, includingor loss both accrued couponstatement and amortised of profit or loss Mineral rights. Mineral rights include rights for evaluation, explorationGain/(loss) and production reclassified of mineral resources under the licences or Gain/(loss) reclassified recognised in from other discountFinancing or activities premium (including fees deferred at origination, if any),recognised are not in presen tedfrom separately other and are included in the carrying agreements. Such assets are carried at cost, amortisation is charged on a straight-line basis over the shorter of the valid period of the other comprehensive valuesForeign of exchange the related non-deliverable items in the consolidated forward contracts, statement net of financial position.other(5) comprehensive44 Other financial gain/(loss), net license or the agreement, or the expected life of mine, starting fromcomprehensive the date when income production to profit activities commence. TheLine incosts the consolidated directly comprehensive income to profit Line in the consolidated attributable to acquisition of rights for evaluation, exploration and productionincome or related costsor loss unavoidably arising fromstatement licences of profit and or loss TheCross effective currency interest interest method rate swaps, is a method net of allocating interest incomeincome or(3) interest expenseor loss3 over the relevantOther period, financialstatement so gain/(loss), as of profitto achieve or netloss relatedFinancing agreements activities (such as social and infrastructure objects construction) are capitalised as a part of the mineral rights. If the aFinancingOperating constant activitiesperiodicactivities rate of interest (effective interest rate) on the carrying amount. The effective interest rate is the rate that exactly reservesForeign related exchange to the non-deliverable mineral rights are forward not economically contracts, net viable , the carrying(5) amount of such44 mineral rightsOther is written financial off. gain/(loss), net discountsForeign exchange estimated non-deliverable future cash payments forward orcontracts, receipts net(excluding future credit(5)(8) losses) through448Other the expected operatingOther life financialincome/(expenses), of the financial gain/(loss), net instrument or a shorter period, if appropriate, to the net carrying amount of the financial instrument. The effective interest rate Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net Mineral resources are recognised as assets when acquired as part of a business combination and then depleted using the unit-of- discounts cash flows of variable interest instruments to the next interest repricing date, except for the premium or discount which Operating activities Operating activities production method based on total proved mineral reserves. Proved mineral reserves reflect the economically recoverable quantities reflectsDuring the the year credit ended spread 31 overDecember the floati 2020,ng rate there specified was no inmaterial the instrument, hedge ineffectiveness. or other variables that are not reset to market rates. Such whichForeign can be exchange legally recovered non-deliverable in the future forward from contracts, known mineralnet deposits and(8) were determined8 by Other independent operating professional income/(expenses), net premiumsForeign exchange or discounts non-deliverable are amortised forward over thecontracts, whole expectednet life of the (8)instrument. The 8present Other value operating calculation income/(expenses), includes all fees net appraisersTotal when acquired as part of a business combination and are subject(16) to updates in future55 periods. paidTotalThe impactor received of cash between flow hedges parties of to foreign the contract currency that risk are on an changes integral partin equity(16) of the was effective as follows: 55interest rate. 2020 IntangibleDuring assetsthe year other ended than 31 goodwill.December The 2020, Group’s there intangible was no material assets hedgeother than ineffectiveness. goodwill have definite useful lives and primarily ClassificationDuring the year and ended subsequent 31 December measurement 2020, there of financialwas no material assets. hedge The Group ineffectiveness. classifies its financial assets in the following include acquired core process technology, distribution agreements, customer relationships, trademarks, capitalised computer measurementAs at 1 January categories: – softwareThe impact costs andof cash other flow intangible hedges assets.of foreign currency risk on changes in equity was as follows: EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) • those to be measured subsequently at fair value (either through other comprehensive income or profit or loss), and These assets are capitalised on the basis of the costs incurred to acquire and bring them to use. 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 As at 1 January – •TaxA sthose at effect 1 January to be measured at amortised cost. (5)– Intangible assets with definite useful lives are amortised using the straight-line method over their useful lives: Effective portion of changes in fair value of cash flow hedges (16) TheTotalEffective classification hedging portion reserve of depends changes as at on in31 the fair December Group’svalue of business cash flow model hedges for managing the financial assets and the contractual terms of the 34(16) Transfer of changes in fair value of cash flow hedges to profit or loss Useful lives in years 55 cash Transfer flows. of changes in fair value of cash flow hedges to profit or loss 55 Tax effect (5) Tax effect (5) Know-how and production technology 5 – 18 For debt instruments, the subsequent measurement depends on the business model in which the investment is held: TrademarksTotal hedging reserve as at 31 December 15 34 Total hedging reserve as at 31 December 34 Customer relationships 10 Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective Distribution agreement 8 interest rate method. Any gains or losses arising from derecognition are recognised directly in profit or loss. Software licences 5

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EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 192 BASISDERIVATIVE OF PREPARATION FINANCIAL ASSETS AND SIGNIFICA AND LIABILITIESNT ACCOUNTING / CONTINUED POLICIES / CONTINUED Assets that are held for collection of contractual cash flows and for sale, where the assets’ cash flows represent solely payments of Derecognition of financial assets. The Group derecognises financial assets when (i) the assets are31 redeemed December 2019 or the rights to cash principal and interest, are measured at fair value through other comprehensive income (FVOCI). flows from the assets have otherwise expired or (ii) the Group has transferred substantially allDerivative the risks assets and rewards ofDerivative ownership liabilities of the assets or (iii) the Group has neither transferred nor retained substantially all risks and rewards(million of ownership US$) but has not (millionretained US$) Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss (FVPL). For more 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED 19control. DERIVATIVE Control is retained FINANCIAL if the counterparty ASSETS does not have AND the LIABILITIESpractical ability to / sell CONTINUED the asset in its entirety to an unrelated third details on assets at FVPL, please refer to (below) and (above). Operating activities Derivative financial instruments Application of 31hedge December accounting 2019 party without needing to impose additional restrictions on the sale. 31 December 2019 Derivative assets Derivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities For investments in equity instruments that are not held for trading, when the Group has made an irrevocable election at the time of (million US$) (million US$) Classification and derecognition of financial liabilities. The Group’s financial liabilities have the(million following US$) measurement categories:(million US$) initial recognition to account for the equity investment at FVOCI, there is no subsequent reclassification of gains and losses to profit 2020 – 2 Operating activities (a)Operating derivative activities liabilities (see Derivative financial instruments below) and (b) other financial liabilities. Other financial liabilities are or loss. Dividends from such investments are recognised in profit or loss within “Dividend income”, when the Group’s right to receive carried at amortised cost. The Group’s other financial liabilities comprise “trade and other payables” and “borrowings and bonds” and paymentsCommodity is established. swaps and Impairment collars losses and reversal of impairment losses on equity investments measured at FVOCI are not Commodity swaps and collars Derivative Derivative “Project Finance” in the consolidated statement of financial position. The Group derecognises financial liabilities when, and only reported2020 separately from other changes in fair value. – 2 2020 Currency pair Volume (million– assets (million liabilities2 when, the Group's obligations are discharged, cancelled or they expire. (sell/buy) US$) US$) (million US$) Trade and other receivables. Trade and other receivables are recognised initially at fair value and subsequently measured at Operating activities Derivative financial instruments. The Group’s derivative financial instruments comprise forwards, options and swap contracts in amortised cost using the effective interest method, less ECL allowance. Derivative Derivative Derivative Derivative Currency pair Volume (million assets (million liabilities Foreignforeign exchange, exchange securitiesnon-deliverable and commodities. forward contracts, Derivative net financial instruments, includingCurrency pair forward Volume rate (million agreements, assets (million options andliabilities (sell/buy) US$) US$) (million US$) (sell/buy) US$) US$) (million US$) Initial recognition of financial instruments. Derivatives are initially recorded at their fair value. All other financial assets and liabilities interest2020 rate swaps, are carried at their fair value. All derivative instruments are carriedUSD/RUB as assets when 135their fair value is9 positive and– are Operatinginitially recorded activities at their fair value plus transaction costs. The fair value at initial recognition is best evidenced by the transaction Operatingas2020 liabilities activities when their fair value is negative. Changes in the fair value of derivativeBRL/USD instruments are recognised 33 in profit– or loss (as – price.Foreign A gain exchange or loss on non-deliverable initial recognition forward is only contracts, recorded netif there is a difference between the fair value and the transaction price Foreignfinancial exchangegain/loss ornon-deliverable operating income/expense) forward contracts, in the net period in which they arise, unless hedge accounting requirements are applied Financing activities which2020 can be evidenced by other observable current market transactions in the same USD/RUBinstrument or by a valuation 135 technique9 whose – 2020(Note 19). Derivatives are classified as current or non-current depending on the contractuaUSD/RUBl maturity of 135the derivative. 9 – inputs include only data from observable markets. Foreign exchange non-deliverable forward contracts, net BRL/USD 33 – – Offsetting financial instruments. Financial assets and liabilities are offset and the BRL/USDnet amount is reported 33 in the consolidated– – 2020 2020 USD/EUR 76 – 8 All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention statement of financial position only when there is a legally enforceable right to offset the recognised amounts, and there is an Financing activities Financing activities (“regular way” purchases and sales) are recorded at their trade date, which is the date that the Group commits to deliver a financial 2020intention to either settle on a net basis, or to realise the asset and settle the liabilityBRL/USD simultaneously. Such 32 a right to offset– (a) must not1 Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net asset. All other purchases are recognised when the Group becomes a party to the contractual provisions of the instrument. 2021be contingent on a future event and (b) must be legally enforceable in all of the followingUSD/EUR circumstances: 80 (i) in the normal– course of 7 2020 USD/EUR 76 – 8 2020business, (ii) in the event of default and (iii) in the event of insolvency or bankruptcy.USD/EUR 76 – 8 . Financial instruments are reclassified only when the business model for managing the portfolio Cross currency interest rate swaps, net Reclassification2020 of financial assets BRL/USD 32 – 1 2020 BRL/USD 32 – 1 as a whole changes. The reclassification takes place from the beginning of the first reporting period that follows after the change in 2020Joint arrangements. Under IFRS 11 “Joint Arrangements”, investments in joint arrangementsUSD/RUB are classified 310 as either joint– operations15 or the 2021business model. The Group did not change its business model during the current anUSD/EURd comparative period 80 and did not –make any 7 20212022joint ventures depending on the contractual rights and obligations of each investor.USD/RUBUSD/EUR The Group has assessed 292 80 the nature 21– of its joint –7 arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method. reclassifications.Cross currency interest rate swaps, net Cross2023 currency interest rate swaps, net USD/RUB 511 38 – USD/RUB 310 – 15 USD/RUB 310 – 15 Financial2020 assets impairment – credit loss allowance for ECL. Loss allowances are measured on either of the following bases: 12- 2020TotalUnder derivative the equity financial method ofassets/liabilities accounting, interests in joint ventures are initially recognised at cost and adjusted– thereafter 68 to recognise 33 month2022 ECLs that result from default events that are possible within the 12 months afterUSD/RUB the reporting date; 292 and lifetime ECLs 21 that – the2022 Group’s share of the post-acquisition profits or losses, movements in other comprehensiveUSD/RUB income. 292 When the Group’s 21 share of – The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: result2023 from all possible default events over the expected life of a financial instrument. USD/RUB 511 38 – losses2023 in a joint venture equals or exceeds its interests in the joint ventures (whichUSD/RUB includes any long-term 511 interests that, 38 in substance,– form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred Total derivative financial assets/liabilities – 68 33 Total derivative financial assets/liabilities 2020 – 68 33 As permitted by IFRS 9 “Financial Instruments”, the Group measures loss allowances for trade receivables applying a simplified obligations or made payments on behalf of the joint ventures. Gain/(loss) approachThe impact at an ofamount cash flowequal hedges to lifetime of foreign ECL. In currency calculating risk the on comprehensiveexpected credit incomeloss, the and Group profit considers or loss was the ascredit follows: rating for each The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: counterparty, adjusted with forward-looking factors specific to the debtors and economic environment in which they operate, and Unrealised gains on transactions between the Group and its jointrecognised ventures in are eliminatedfrom other to the extent of the Group’s interest in the 2020 joint ventures. Unrealised losses are also eliminated unless the transactionother providescomprehensive evidence of2020 an impairment of the asset historical credit loss experience. Line in the consolidated Gain/(loss) comprehensive incomeGain/(loss) to profit transferred. Accounting policies of the joint ventures have been changedincome where necessaryor loss to ensure consistencystatement with the of profitpolicies or loss For other financial assets loss allowances are measured as 12-month ECLGain/(loss) unless therereclassified has been a significant increase in credit risk adopted by the Group. Gain/(loss) reclassified since initial recognition or if the instrument contains a significant financingrecognised component. in from In those other cases the allowance is based on the Financing activities recognised in from other other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net lifetime ECL. comprehensive income to profit Line in the consolidated Income taxes. Income taxes have been provided for in the consolidatedcomprehensive financial income statements to profit in accordance with Linetax legislationin the consolidated income or loss statement of profit or loss enactedCross currency or substantively interest rate enacted swaps, by net the reporting date for each countryincome where(3) the Groupor loss3 companies areOther registered. financialstatement The gain/(loss), of income profit or taxnetloss The loans granted are analysed individually based on credit history of each borrower with the Group, financial performance and Financing activities expenseFinancingOperating comprises activitiesactivities current tax and deferred tax and is recognised in profit or loss unless it relates to transactions that are recognised external credit ratings. Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net inForeign other comprehensiveexchange non-deliverable income or directlyforward incontracts, equity. net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net TheCross Group currency recognises interest a loss rate allowance swaps, netbased on the difference between the(3) contractual cash3 flows and allOther the cash financial flows gain/(loss),that the net TheTotalCross Group currency companies interest are rate subject swaps, to net tax rates depending on the country(16) (3)of domicile (Note553 29). Other financial gain/(loss), net GroupOperating expects activitiesto receive, discounted at the original effective interest rate. The calculation of the present value of the estimated Operating activities future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and CurrentDuring the tax year is the ended amount 31 Decemberexpected to 2020, be paid there to orwas recovered no material from hedge the tax ineffectiveness. authorities in respect of taxable profits or losses for the Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net selling the collateral, whether or not foreclosure is probable. current and prior periods. Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and Total (16) 55 temporaryTotalThe impact differences of cash flow arising hedges between of foreign the currencytax bases risk of assetson changes and liabilities in equity(16) and was their as follows: carrying55 amounts for financial reporting Financial assets are written-off, in whole or in part, when the Group has exhausted all practical recovery Financial assets – write-off. purposes. In accordance with the initial recognition exemption, deferred taxes are not recorded for temporary differences on initial2020 effortsDuring and theconcluded year ended that there31 December is no reasonable 2020, there expectation was no material of recovery. hedge The ineffectiveness. Group may write off financial assets that are still During the year ended 31 December 2020, there was no material hedge ineffectiveness. recognitionAs at 1 January of an asset or a liability in a transaction other than a business combination if the transaction, when initially recorded, – subjectThe toimpact enforcement of cash flowactivity hedges when of it foreignseeks to currency recover risk amount on changess that are in contractually equity was as due follows: but there is no reasonable expectation of affectsThe impact neither of cashaccountin flow hedgesg nor taxable of foreign profit. currency risk on changes in equity was as follows: recovery. Effective portion of changes in fair value of cash flow hedges (16) 2020 DeferredTransfer of tax changes liabilities in are fair notvalue recorded of cash for flow temporary hedges to differences profit or loss on initial recognition of goodwill and subsequently for goodwill2020 55 ModificationAs at 1 January of financial assets. The Group sometimes renegotiates or otherwise modifies the contractual terms of the financial – whichTaxAs at effect 1 is January not deductible for tax purposes. Deferred tax balances are measured at tax rates enacted or substantively enacted at the (5)– assets. The Group assesses whether the risks and rewards of the modified asset are substantially different as a result of the Effective portion of changes in fair value of cash flow hedges (16) reportingEffective portiondate which of changes are expected in fair valueto apply of cashto the flow period hedges when the temporary differences will reverse or the tax loss carry forwards(16) contractual modification by comparing the original and revised expected cash flows to assets. If the modified terms are substantially Total hedging reserve as at 31 December 34 Transfer of changes in fair value of cash flow hedges to profit or loss 55 willTransfer be utilised. of changes Deferred in fair tax value assets of cashfor deductible flow hedges temporary to profit differences or loss and tax loss carry forwards are recorded only to the extent55 different, the Group derecognises the original financial asset and recognises a new asset at its fair value. If the risks and rewards do that it is probable that the temporary difference will reverse in the future and there is sufficient future taxable profit available against Tax effect (5) Tax effect (5) not change, the modification does not result in derecognition, the Group recalculates the gross carrying amount by discounting the which the deductions can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to modifiedTotal contractualhedging reserve cash flows as at by31 theDecember original effective interest rate, and recognises a modification gain or loss in profit or loss. 34 offsetTotal hedgingcurrent tax reserve assets as against at 31 December current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes34 levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Deferred income tax is provided on post-acquisition retained earnings of subsidiaries, except where the Group controls the subsidiary’s dividend policy and it is probable that the difference will not be reversed through dividends or upon disposal in the foreseeable future.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 192 BASISDERIVATIVE OF PREPARATION FINANCIAL ASSETS AND SIGNIFICA AND LIABILITIESNT ACCOUNTING / CONTINUED POLICIES / CONTINUED Deferred income tax liabilities are provided on taxable temporary differences arising from investments in associates and joint Treasury shares. Where the Company or its subsidiaries purchases the Company’s shares, the consideration31 December paid,2019 including any arrangements except for deferred income tax liabilities for which the timing of the reversal of the temporary difference is controlled directly attributable incremental costs, net of income taxes, is deducted from equity attributableDerivative to the assets Company’s equityDerivative holders liabilities until by the19 Group DERIVATIVE and it is probable FINANCIAL that the temporary ASSETS differences AND will not LIABILITIES be reversed in the/ CONTINUED foreseeable future. Generally the Group is 19the shares DERIVATIVE are cancelled, reissuedFINANCIAL or disposed ASSETS of. Where AND such shares LIABILITIES are subsequently / CONTINUED sold or (millionreissued, US$) any consideration(million recei ved,US$) unable to control the reversal of the temporary difference for associates and joint ventures. Only where there is an agreement in netOperating of any directlyactivities attributable incremental transaction costs and the related income tax effects, is included in equity attributable to place that gives the Group the ability to control the reversal of the temporary difference, a deferred income31 December tax liability 2019 is not the Company’s equity holders. 31 December 2019 Commodity swaps and collars recognised. Derivative assets Derivative liabilities Derivative assets Derivative liabilities (million US$) (million US$) 2020Capital contribution. Capital contributions received from shareholders in a form of a perpetual loan(million which US$)– does not require(million US$)2 DeferredOperating income activities tax assets are recognised on deductible temporary differences arising from investments in associates and joint repayment,Operating activities or for which the Group will be able to avoid any payments is classified as a component of equity within retained earnings arrangementsCommodity only swaps to the and extent collars that it is probable the temporary difference will be reversed in the future and there is sufficient Commodityand others reserves swaps and in thecollars consolidated statement of changes in equity. Derivative Derivative taxable profit available against which these temporary difference can be utilised. Currency pair Volume (million assets (million liabilities 2020 – 2 2020Dividends. Dividends are recognised as a liability and deducted from equity in the period(sell/buy) in which theyUS$) are– declaredUS$) and approved.(million US$)2 Uncertain tax positions. The Group’s uncertain tax positions are reassessed by management at the end of each reporting period. Dividends are disclosed when they are proposed before the reporting date or proposed or declared after the reporting date but Operating activities Liabilities are recorded for income tax positions that are determined by management as more likely than not to resultDerivative in additi onalDerivative before the consolidated financial statements are authorised for issue. Derivative Derivative taxes being levied if the positions were to be challenged by the tax authorities. The assessmentCurrency pair isVolume based (million on the assets interpretation (million of taxliabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million assets (million liabilities Value added tax (“VAT”). Output VAT related to sales is payable to tax authorities on the earlier of (a) collection of receivables from laws that have been enacted or substantively enacted by the end of the reporting period,(sell/buy) and any known US$)court or otherUS$) rulings (million on US$) 2020 USD/RUB(sell/buy) US$) 135 US$)9 (million US$)– customers or (b) delivery of goods or services to customers. VAT incurred on purchases may be offset, subject to certain restrictions, suchOperating issues. Liabilities activities for penalties, interest and taxes other than on income are recognised based on management’s best estimate of Operating activities against2020 VAT related to revenues, or can be reclaimed in cash from the tax authoritiesBRL/USD under certain circumstances. 33 VAT– related to – the Foreignexpenditure exchange required non-deliverable to settle the obligations forward contracts, at the end net of the reporting period. Adjustments for uncertain income tax positions Foreign exchange non-deliverable forward contracts, net salesFinancing and purchases activities is recognised in the consolidated statement of financial position on a gross basis and disclosed separately as an are recorded within the income tax charge. 2020 USD/RUB 135 9 – asset2020 and liability. Where provision has been made for the impairment of receivables,USD/RUB the impairment loss 135 is recorded 9for the gross – Foreign exchange non-deliverable forward contracts, net Inventories. Inventories are recorded at the lower of cost and net realisable value. TheBRL/USD cost of inventory for 33 distribution companies– is – amount of the debtor, including VAT. BRL/USD 33 – – 2020 2020 USD/EUR 76 – 8 determined on FIFO basis by the cost of each inventory lot, for production companies – on the weighted-average basis. The cost of Financing activities Financing activitiesBorrowings are initially recognised at fair value, net of transaction costs incurred, and are subsequently stated at finished goods and work in progress comprises direct costs such as raw material, labour, other direct costs and related production Borrowings.2020 BRL/USD 32 – 1 amortised cost using the effective interest method. overheadsForeign (based exchange on normal non-deliverable operating forward capacity) contracts, as well as net transportation expenses to the point of sale, but excludes borrowing 2021Foreign exchange non-deliverable forward contracts, net USD/EUR 80 – 7 costs.2020 Net realisable value is the estimated selling price in the ordinary course of business,USD/EUR less the estimated 76 cost of compl– etion and 8 2020 USD/EUR 76 – 8 TradeCross currencyand other interest payables. rate Trade swaps, payables net are accrued when the counterparty performs its obligations under the contract and are selling expenses. 2020 BRL/USD 32 – 1 recognised2020 initially at fair value and subsequently measured at amortised cost usingUSD/RUBBRL/USD the effective interest 310 32 method. – 151 Factoring2021 arrangements. The Group enters into non-recourse factoring arrangementsUSD/EUR under which trade receivables 80 can –be sold and 7 Investment20212022 grants. Investment grants are recognised at their fair value where thereUSD/RUBUSD/EUR is a reasonable assurance 292 80 that the 21– grant will be –7 therefore are derecognised in the full amount from trade receivables as the Group does not retain substantially all risks and rewards Cross currency interest rate swaps, net receivedCross2023 currency and the interest Group rate will complyswaps, netwith all attached conditions. Investment grantsUSD/RUB relating to the purchase 511 of property, 38 plant and – of ownership and no longer retain control over the asset sold. The Group continues to collect and service the receivables and then equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over 2020 USD/RUB 310 – 15 2020Total derivative financial assets/liabilities USD/RUB 310– 68– 3315 transfers to the purchaser the collected amounts of the trade receivables sold less loss reserve. Loss reserve is recognised as other the expected lives of the related assets. 2022 USD/RUB 292 21 – 2022 USD/RUB 292 21 – receivable. Factoring fees (e.g. running costs etc.) are recognised as other financial expense. The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: 2023 USD/RUB 511 38 – Provisions2023 for liabilities and charges. Provisions for liabilities and charges are recognisedUSD/RUB when the Group 511 has a present 38 legal or – Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the Prepayments.Total derivative financial assets/liabilities – 68 33 constructiveTotal derivative obligation financial as assets/liabilitiesa result of past events, it is probable that an outflow of resources will2020 be required – to settle 68the obligation, 33 goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset and a reliable estimate of the amount can be made. Provisions are measured at theGain/(loss) present value of the expenditures expected to be whichThe will impact itself ofbe cash classified flow hedgesas non-current of foreign upon currency initial recognition.risk on comprehensive Prepayments income to acquire and profit assets or are loss transferred was as follows: to the carrying requiredThe impact to settleof cash the flow obligation hedges usingof foreign pre-tax currency rate that risk reflects on comprehensive currentGain/(loss) market income assessmentsreclassified and profit of orthe loss time was value as follows:of money and the risks recognised in from other amount of the asset once the Group has obtained control of the asset and it is probable that future economic benefits associated with specific to the obligation. The increase in the provision due to the passage of time is recognised as an interest expense. 2020 other comprehensive 2020 the asset will flow to the Group. Other prepayments are recognised in profit or loss when the goods or services relating to the Line in the consolidated Gain/(loss) comprehensive incomeGain/(loss) to profit Where the Group expects a provision to be reimbursed, for example incomeunder an insuranceor loss contract, the reimbursementstatement is recognisedof profit or loss prepayments are received. If there is an indication that the assets, goodsGain/(loss) or services relatingreclassified to a prepayment will not be received, Gain/(loss) reclassified the carrying value of the prepayment is written down accordingly andrecognised a corresponding in from impairment other is recognised in profit or loss for asFinancing a separate activities asset but only when the reimbursement is virtually recognised certain. in from other the year. other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net comprehensive income to profit Line in the consolidated Levies and charges, such as taxes other than income tax or regulatorycomprehensive fees basedincome on to information profit related to a periodLine beforein the consolidated the Cash and cash equivalents. Cash and cash equivalents include cash in hand,income term depositsor loss held with banks, and othestatementr short-term of profit or loss obligationCross currency to pay interest arises, rateare recognisedswaps, net as liabilities when the obligatingincome event(3) that givesor loss rise3 to pay a levyOther occurs, financialstatement as identified gain/(loss), of profit byor netloss the highlyFinancing liquid investments activities with original maturities of three months or less. legislationFinancingOperating thatactivitiesactivities triggers the obligation to pay the levy. If a levy is paid before the obligating event, it is recognised as a prepayment. Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net Term deposits for longer than three months that are repayable on demand within one working day without penalties or that can be Asset retirement obligations. The Group’s mining, extraction and processing activities are subject to requirements under federal, Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net redeemed/withdrawn, subject to the interest income being forfeited, are classified as cash equivalents if the deposit is held to meet state and local environmental regulations which result in asset retirement obligations. Such retirement obligations include restoration Operating activities costsOperating primarily activities relating to mining and drilling operations, decommissioning of underground and surfacing operating facilities. short term cash needs and there is no significant risk of a change in value as a result of an early withdrawal. Other term deposits are During the year ended 31 December 2020, there was no material hedge ineffectiveness. Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net included into fixed-term deposits. The present value of a liability for asset retirement obligation is recognised in the period in which it is incurred if respective costs Total (16) 55 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 Cash and cash equivalents are carried at amortised cost using the effective interest method. could be reliably estimated. The estimated future land restoration costs discounted to present value, are capitalised in underlying During the year ended 31 December 2020, there was no material hedge ineffectiveness. itemsDuring of the property, year ended plant 31and December equipment 2020, and therethen depreciatedwas no material over hedge the useful ineffectiveness. life of such assets based on the unit-of-production 2020 Restricted balances are excluded from cash and cash equivalents. Balances restricted from being exchanged or used to settle a methodAs at 1 January for oil and gas assets and on the straight-line basis for other assets. The unwinding of the obligation is recognised in profit or– liabilityThe for impact at least of cashtwelve flow months hedges after of foreignthe reporting currency date risk are on included changes in in non-current equity was assets as follows: in the consolidated statement of financial lossEffectiveThe impactas part portion of cashother of changesflow financial hedges ingain/loss. fair of valueforeign Actual of currencycash restoration flow risk hedges on costs changes are recognised in equity was as expensesas follows: against the provision when incurred. (16) position. 2020 ChangesTransfer of to changes estimated in futurefair value costs of arecash recognised flow hedges in theto profit consolidated or loss statement of financial position by either increasing or 202055 In managingAs at 1 January the business, management focuses on a number of cash flow measures including “gross cash flow” and “free cash flow”. – decreasingTaxAs at effect 1 January the provision for land restoration and the asset to which it relates. The Group reassesses its estimation of land restoration(5)– GrossEffective cash flow portion refers of tochanges the operating in fair value profit of after cash income flow hedges tax and adjusted for items which are not of a cash nature, which have been (16) provisionTotalEffective hedging portionas at reservethe of end changes asof eachat in31 fair reportingDecember value ofperiod. cash flow hedges 34(16) chargedTransfer or credited of changes to profit in fair or value loss. ofThe cash gross flow cash hedges flow isto availableprofit or lossto finance movements in operating assets and liabilities, 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 investing and financing activities. Revenue recognition. Revenue from contracts with customers is recognised when control of the goods or services is transferred to a Tax effect (5) customer.Tax effect The amount of revenue recognised reflects the consideration the Group expects to receive in exchange for goods or (5) FreeTotal cash hedging flows are reserve the cash as flows at 31 availableDecember to the debt or equity holders of the business. 34 services,Total hedging taking reserve into account as at 31any December trade, volume and other discounts. Advances received before the control passes to a customer are34 recognised as the contract liabilities. There are no other contract liabilities. The amount of consideration does not contain a significant Since these terms are not standard IFRS measures EuroChem Group’s definition of gross cash flow and free cash flow may differ from financing component as payment terms for the majority of contracts are less than one year. that of other companies. Contracts with customers for the supply of products use a variety of delivery terms. In a number of contracts Group is responsible for Fixed-term deposits. Fixed-term deposits are deposits held with banks and have various original maturities and can be withdrawn providing shipping services after the date at which control of the goods passes to the customer at the loading point. Under IFRS 15 with early notification and/or with penalty accrued or interest income forfeited. They are included in the current assets, except for “Revenue from Contracts with Customers” such shipping revenue is required to be accounted for as a separate performance those with maturities greater than 12 months after the reporting date, which are classified as non-current assets. obligation and is recognised over time as the service is rendered. The Group allocates the transaction price to each performance Share capital. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in obligation based on the relative stand-alone selling prices of the product and shipping services. equity as a deduction, net of tax, from the proceeds. Any excess of the fair value of consideration received over the par value of shares issued is presented in the consolidated statement of changes in equity as a share premium.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 194 ADOPTIONDERIVATIVE OF FINANCIAL NEW OR REVISED ASSETS ANDSTANDARDS LIABILITIES AND / CONTINUED INTERPRETATIONS In the sales disclosure the revenue of certain product groups includes the proceeds from shipping services presented in the note as New amendments and improvements to standards set out below became effective 1 January 202031 (unless December otherwise 2019 stated) and did well. Costs related to rendering of shipping services are mainly represented by transportation expenses and included in distribution not have any impact or did not have a material impact on the Group’s consolidated financialDerivative statements: assets Derivative liabilities costs disclosed in the corresponding note. (million US$) (million US$) 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED •19 Amendments DERIVATIVE to IFRS 3 –FINANCIAL Definition of a business. ASSETS The ANDamendmen LIABILITIESt has been early / CONTINUEDadopted by the Group as of 1 January 2019. Sales are shown net of VAT and other sales taxes. Operating activities 31 December 2019 • Amendments to the Conceptual Framework for Financial Reporting; 31 December 2019 Derivative assets Derivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities Interest income is recognised on a time-proportion basis using the effective interest method. • Amendments to IAS 1 and IAS 8 – Definition of materiality; (million US$) (million US$) 2020 (million US$)– (million US$)2 • EmployeeOperating benefits. activities Wages, salaries, contributions to the state pension and social insurance funds, paid annual leave and sick leave, Operating Amendments activities to IFRS 9, IAS 39 and IFRS 7 – Interest rate benchmark reform (phase 1); • Amendments to IFRS 16 – Covid-19-Related Rent Concessions (effective from 1 June 2020). bonuses,Commodity and non-monetary swaps and collars benefits are accrued in the year in which the associated services are rendered by the employees of the Commodity swaps and collars Derivative Derivative Group. A number of new standards, amendments to standards and interpretations are notCurrency yet effective pair Volume as at (million 31 December assets (million 2020, and haveliabilities 2020 – 2 2020 (sell/buy) US$)– US$) (million US$)2 A number of the Group’s European subsidiaries operates defined benefit pension plans, which represent an amount of pension not been early adopted by the Group: Operating activities benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years ofDerivative service and Derivative • IFRS 17 “Insurance contracts”; Derivative Derivative compensation. The defined benefit obligation is calculated annually by independent Currencyactuaries pair us Volumeing the (million projected assets unit (million credit method.liabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million assets (million liabilities (sell/buy) US$) US$) (million US$) • Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor(sell/buy) and its AssociateUS$) or JointUS$) Venture; (million US$) Remeasurements of post-employment benefit obligations are recognised in other comprehensive income. 2020 USD/RUB 135 9 – • Amendments to IFRS 17 and an amendment to IFRS 4; Operating activities Operating activities BRL/USD 33 – – Earnings/(loss) per share. Earnings/(loss) per share is determined by dividing the profit or loss attributable to equity holders of the 2020 Foreign exchange non-deliverable forward contracts, net •Foreign Amendments exchange to non-deliverableIAS 1 – Classification forward of liabilities contracts, as net current or non-current, deferral of effective date; Company by the weighted average number of ordinary shares outstanding during the reporting period. Financing activities 2020 USD/RUB 135 9 – •2020 Narrow scope amendments to IAS 16, IAS 37 and IFRS 3 – Proceeds before intendedUSD/RUB use, Onerous contracts 135 (cost of9 fulfilling a – Foreigncontract), exchange Reference non-deliverable to the Conceptual forward Framework; contracts, net Segment2020 reporting. A segment is a component of the Group that is engaged in businessBRL/USD activities from which 33 it may earn –revenues – 2020 BRL/USD 33 – – and incur expenses. Operating segments are reported in a manner consistent with the internal reporting provided to the chief •2020 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest rate benchmarkUSD/EUR reform (phase 2); 76 – 8 operatingFinancing decision-maker. activities The chief operating decision-maker is responsible for allocating resources and assessing performance of •2020Financing Amendments activities to IFRS 1, IFRS 9, IFRS 16 and IAS 41 – Annual Improvements to IFRSsBRL/USD 2018-2020. 32 – 1 the Foreignoperating exchange segments. non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net Unless2021 otherwise described above, the new standards, amendments to standards USD/EURand interpretations are 80 expected to –have no impact7 2020 USD/EUR 76 – 8 2020 USD/EUR 76 – 8 3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING orCross to have currency a non-material interest rate impact swaps, on netthe Group’s consolidated financial statements. 2020 BRL/USD 32 – 1 2020 USD/RUBBRL/USD 310 32 – 151 ACCOUNTING POLICIES 2021 USD/EUR 80 – 7 20212022 USD/RUBUSD/EUR 292 80 21– –7 The Group makes estimates and assumptions that affect the amounts recognised in the consolidated financial statements and the Cross currency interest rate swaps, net Cross2023 currency interest rate swaps, net USD/RUB 511 38 – carrying2020 amounts of assets and liabilities. Estimates and judgements are continually evaluatedUSD/RUB and are based 310 on management’s– 15 2020 USD/RUB 310 – 15 experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Total derivative financial assets/liabilities – 68 33 2022 USD/RUB 292 21 – 2022 USD/RUB 292 21 – Management also makes certain judgements, apart from those involving estimations, in the process of applying the accounting The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: policies.2023 Judgements that have the most significant effect on the amounts recognised USD/RUBin the consolidated financial 511 statements 38 and – 2023 USD/RUB 511 38 – estimatesTotal derivative that can cause financial an adjustment assets/liabilities to the carrying amount of assets and liabilities include: – 68 33 Total derivative financial assets/liabilities 2020 – 68 33 Gain/(loss) Taxation.The impact Judgments of cash are flow required hedges in of determining foreign currency tax liabilities risk on (Notecomprehensive 32). The Group income recognises and profit liabilities or loss was for taxesas follows: based on The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: estimates of whether additional taxes will be due. Where the final outcome of various tax matters is different from the amounts that recognised in from other 2020 other comprehensive 2020 were initially recorded, such differences will impact the tax assets and liabilities in the period in which the matter was resolved. Line in the consolidated Gain/(loss) comprehensive incomeGain/(loss) to profit income or loss statement of profit or loss Deferred income tax asset recognition. The recognised deferred tax Gain/(loss)assets represent reclassified income taxes recoverable through future Gain/(loss) reclassified recognised in from other Financing activities recognised in from other deductions from taxable profits and are recorded in the consolidated statement of financial position. Deferred income tax assets are other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net recorded to the extent that realisation of the related tax benefit is comprehensiveprobable. This includesincome to temporaryprofit difference expectedLine in to the reverse consolidated in comprehensive income to profit Line in the consolidated the future and the availability of sufficient future taxable profit against whichincome the deductionsor losscan be utilised. The futurestatement taxable of profitprofits or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss and Financingthe amount activities of tax benefits that are probable in the future are based on the medium term business plan prepared by management FinancingOperating activitiesactivities and Foreignextrapolated exchange results non-deliverable thereafter. The forward business contracts, plan is based net on management(5) expectations44 that are believedOther to financial be reasonable gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net underCross the currencycircumstances interest (Note rate 29). swaps, net (3) 3 Other financial gain/(loss), net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net Operating activities Operating activities Related party transactions. The Group enters into transactions with related parties in the normal course of business (Note 31). These During the year ended 31 December 2020, there was no material hedge ineffectiveness. transactionsForeign exchange are generally non-deliverable priced at market forward rates. contracts, Judgement net is applied in determining(8) whether8 transactions Other operating are priced income/(expenses), at market or net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net non-marketTotal rates where there is no active market for such transactions. Judgements(16) are made55 by comparing prices for similar types TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 of transactions with unrelated parties. During the year ended 31 December 2020, there was no material hedge ineffectiveness. During the year ended 31 December 2020, there was no material hedge ineffectiveness. 2020 Capital contribution. The Group classified the capital contribution received from a shareholder in a form of perpetual loan which As at 1 January – doesThe not impact require of repayment, cash flow hedges or for which of foreign the Group currency will riskbe able on changes to avoid inany equity payments was as as follows: component of equity. EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) 2020 202055 Recognition of 100% interest in Fertilizantes Tocantins S.A. In 2016, the Group entered into agreement with Fertilizantes Tocantins Transfer of changes in fair value of cash flow hedges to profit or loss S.A.,A accordings at 1 January to which the Group acquired 50% interest plus one share, and entered into put and call options for the remaining 50% – TaxAs at effect 1 January (5)– interestEffective minus portion one share. of changes The judgement in fair value was of applied cash flow that hedges the risks and rewards associated with 100% interest in Fertilizantes (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) TocantinsTransfer S.A. of werechanges transferred in fair value to the of Groupcash flow on 1hedges September to profit 2016, or thus, loss no non-controlling interest was recognised and the 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 transactionTax effect was accounted for as the acquisition of 100% interest in the company. The liability payable for the remaining 50% interest (5) Tax effect (5) minusTotal one hedging share was reserve recognised as at 31 and December reassessed on an annual basis. In 2020, the Group completed an acquisition of 100% interest in 34 Total hedging reserve as at 31 December 34 Fertilizantes Tocantins S.A (Note 31).

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EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

5 PRINCIPAL SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES 195 PRINCIPALDERIVATIVE SUBSIDIARIES, FINANCIAL ASSETS ASSOCIATES AND LIABILITIES AND JOINT / CONTINUED VENTURES / CONTINUED The Group had the following principal subsidiaries, associates and joint ventures as at 31 December 2020: Percentage of Country of Name Nature of business 31 Decemberownership 2019 registration Derivative assets Derivative liabilities Percentage of Country of EuroChem SaratovKaliy, LLC Potash project under development 100% Russia Name19 DERIVATIVE FINANCIAL ASSETSNature AND of business LIABILITIES / CONTINUED ownership registration 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED(million US$) (million US$) EuroChem Group AG Holding and Trading company – Switzerland OperatingGeres Fertilizers, activities LLP Phosphate project under development 100% Kazakhstan 31 December 2019 Azottech, LLC Blasting and drilling 31 December74.99% 2019 Russia Derivative assets Derivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities (million US$) (million US$) (million US$) (million US$) Subsidiaries: 2020 – 2 Operating activities OperatingJoint ventures: activities Industrial Group Phosphorite, LLC Manufacturing 100% Russia EuroChem – Migao Ltd. Holding company 50% Hong-Kong* Azot,Commodity JSC swaps and collars Manufacturing 100% Russia Commodity swaps and collars Derivative Derivative Thyssen Schachtbau EuroChem Drilling, LLC Drilling Currency pair Volume (million assets45% (million liabilities Russia Novomoskovsky2020 Chlor, LLC Manufacturing – 100% Russia 2 2020 (sell/buy) US$)– US$) (million US$)2 Nevinnomyssky Azot, JSC Manufacturing 100% Russia * Represents the country of incorporation of holding company which owns manufacturing facilities located in Yunnan, China Operating activities EuroChem-Belorechenskie Minudobrenia, LLC Manufacturing 100%Derivative RussiaDerivative During the year ended 31 December 2020, the main changes in Group’s structure were as follows: Derivative Derivative Currency pair Volume (million assets (million liabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million assets (million liabilities Kovdorsky GOK, JSC Mining 100% Russia (sell/buy) US$) US$) (million US$) 2020 USD/RUB(sell/buy) US$) 135 US$)9 Percentage(million US$) of– LifosaOperating AB activities Manufacturing 100% Lithuania Operating activities ownership as at EuroChem Antwerpen NV Manufacturing 100% Belgium Name2020 Nature of business Main changes in 2020 BRL/USD 33 31– December 2020– Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net EuroChem-VolgaKaliy, LLC Potash project under development 100% Russia Subsidiaries:Financing activities 2020 USD/RUB 135 9 – Fertilizantes2020 Tocantins S.A. Distribution Acquisition of 50% interestUSD/RUB minus one share 135 (Note 31) 9 100%– EuroChem-Usolsky potash complex, LLC Mining 100% Russia Foreign exchange non-deliverable forward contracts, net 2020 BRL/USD 33 – – Tuapse2020 Bulk Terminal, LLC Logistics Sale of a subsidiary BRL/USD 33 – – EuroChem-ONGK, LLC Gas project under development 100% Russia 2020 USD/EUR 76 – 8 Murmansk Bulkcargo Terminal, LLC Logistics Sale of a subsidiary – EuroChemFinancing Northwest, activities JSC Manufacturing 100% Russia 2020Financing activities BRL/USD 32 – 1

EuroChemForeign North-West-2, exchange non-deliverable LLC forward contracts, Ammonianet project under development 100% Russia 2021Foreign exchange non-deliverable forward contracts, net USD/EUR 80 – 7 EuroChem-Fertilizers,2020 LLP Mining USD/EUR 76 100% Kazakhstan– 8 2020 USD/EUR 76 – 8 Cross currency interest rate swaps, net Astrakhan2020 Oil and Gas Company, LLC Gas project under developmentBRL/USD 32 100% – Russia 1 2020 USD/RUBBRL/USD 310 32 – 151 EuroChem Karatau, LLP Manufacturing 100% Kazakhstan 2021 USD/EUR 80 – 7 20212022 USD/RUBUSD/EUR 292 80 21– –7 Kamenkovskaya Oil and Gas Company LLP Gas project under development 100% Kazakhstan Cross currency interest rate swaps, net Cross2023 currency interest rate swaps, net USD/RUB 511 38 – EuroChem Trading GmbH Trading 100% Switzerland 2020 USD/RUB 310 – 15 2020Total derivative financial assets/liabilities USD/RUB 310– 68– 3315 EuroChem2022 North America Corp. Trading and Distribution USD/RUB 292 100% 21 USA – 2022 USD/RUB 292 21 – EuroChem USA, LLC Ammonia project 100% USA The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: 2023 USD/RUB 511 38 – 2023 USD/RUB 511 38 – EuroChem Agro France SAS Distribution 100% France Total derivative financial assets/liabilities – 68 33 Total derivative financial assets/liabilities 2020 – 68 33 EuroChem Agro Asia Pte. Ltd. Distribution 100% Singapore Gain/(loss) The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: EuroChem Agro Iberia SL Distribution 100% Spain recognised in from other EuroChem Agricultural Trading Hellas SA Distribution 2020 100% Greece other comprehensive 2020 Line in the consolidated Gain/(loss) comprehensive incomeGain/(loss) to profit EuroChem Agro Spa Distribution 100% Italy income or loss statement of profit or loss Gain/(loss) reclassified Gain/(loss) reclassified EuroChem Agro GmbH Distributionrecognised in from other 100% Germany Financing activities recognised in from other EuroChem Agro México SA de CV Distribution other comprehensive 100% Mexico Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net comprehensive income to profit Line in the consolidated comprehensive income to profit Line in the consolidated EuroChem Agro Hungary Kft Distribution income or loss 100%statement of Hungary profit or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss AgrocenterFinancing EuroChem activities Srl Distribution 100% Moldova FinancingOperating activitiesactivities EuroChemForeign Agro exchange Bulgaria non-deliverable Ead forward contracts, Distributionnet (5) 44 Other100% financial gain/(loss), Bulgaria net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net EuroChemCross currency Agro doo interest Beograd rate swaps, net Distribution (3) 3 Other100% financial gain/(loss), Serbia net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net EmergerOperating Fertilizantes activities S.A. Distribution 100% Argentina Operating activities During the year ended 31 December 2020, there was no material hedge ineffectiveness. EuroChemForeign Comercio exchange de non-deliverable Produtos Quimicos forward Ltda. contracts, Distributionnet (8) 8 Other operating100% income/(expenses), Brazil net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net FertilizantesTotal Tocantins S.A. Distribution (16) 55 100% Brazil TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 EuroChem Agro Trading (Shenzhen) Co., Ltd. Distribution 100% China During the year ended 31 December 2020, there was no material hedge ineffectiveness. During the year ended 31 December 2020, there was no material hedge ineffectiveness. 2020 EuroChem Trading RUS, LLC Distribution 100% Russia As at 1 January – Ural-RemStroiService,The impact of cash LLC flow hedges of foreign currency riskRepair on changes and constructions in equity was as follows: 100% Russia EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) Kingisepp RemStroiService, LLC Repair and constructions 100% Russia2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 NovomoskovskAs at 1 January RemStroiService, LLC Repair and constructions 100% Russia – TaxAs at effect 1 January (5)– NevinnomysskEffective portion RemStroiService, of changes inLLC fair value of cash flow hedgesRepair and constructions 100% Russia (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) BereznikiTransfer Mechanical of changes Works, in fair JSC value of cash flow hedges toRepair profit and or lossconstructions 100% Russia 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Tulagiprochim,Tax effect JSC Design engineering 100% Russia (5) Tax effect (5) EuroChem-Project,Total hedging reserve LLC as at 31 December Design engineering 100% Russia 34 Total hedging reserve as at 31 December 34 Harvester Shipmanagement Ltd. Logistics 100% Cyprus Eurochem Logistics International, UAB Logistics 100% Lithuania EuroChem Terminal Sillamäe Osaühing Logistics 100% Estonia EuroChem Terminal Ust-Luga, LLC Logistic project under development 100% Russia Depo-EuroChem, LLC Logistics 100% Russia EuroChem-Terminal Nevinnomyssk, LLC Logistics 100% Russia EuroChem-Energo, LLC Other service 100% Russia EuroChem International Holding B.V. Holding company 100% Netherlands MCC EuroChem JSC Holding company 100% Russia

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EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

6 FAIR VALUE OF FINANCIAL INSTRUMENTS 196 FAIRDERIVATIVE VALUE OFFINANCIAL FINANCIAL ASSETS INSTRUMENTS AND LIABILITIES / CONTINUED / CONTINUED Management applies judgment in categorising financial instruments using the fair value hierarchy. The significance of a valuation b) Assets and liabilities not measured at fair value but for which fair value is disclosed 31 December 2019 input is assessed against the fair value measurement in its entirety. Financial assets and liabilities carried at amortised cost Derivative assets Derivative liabilities (million US$) (million US$) Recurring19 DERIVATIVEfair value measurements FINANCIAL ASSETS AND LIABILITIES / CONTINUED 19The carrying DERIVATIVE amounts of trade FINANCIAL and other receivables, ASSETS trade AND and otLIABILITIESher payables and / originatedCONTINUED loans approximate their fair values and Operating activities Recurring fair value measurements are those that the accounting standards require or permit in the consolidated31 December statement2019 of are included into Level 3 of fair value hierarchy. Cash and cash equivalents and fixed-terms deposits31 Decemberare carried 2019 at amortised cost financial position at the end of each reporting period. Derivative assets Derivative liabilities Commoditywhich approximates swaps and their collars current fair value, included in Level 2 of fair value hierarchy. The fairDerivative values assets in Level 2 and LevelDerivative 3 of liabilitiesthe fair (million US$) (million US$) 2020value hierarchy were estimated using the discounted cash flows valuation technique. (million US$)– (million US$)2 a) FinancialOperating instruments activities carried at fair values Operating activities Loans received and bank borrowings are carried at amortised cost. The fair value of floating rate instruments normally approximates The recurring fair value measurements are included into Level 2 of the fair value hierarchy and are as follows. Commodity swaps and collars Commoditytheir carrying swaps amount. and The collars estimated fair value of fixed interest rate instruments is based on estimated future cashDerivative flows expeDerivativected to Currency pair Volume (million assets (million liabilities 2020 –31 December 31 December 2 2020be received discounted at current interest rates for new instruments with similar credit risk and remaining– maturity. 2 2020 2019 (sell/buy) US$) US$) (million US$)

Financial assets OperatingFair values activitiesanalysed by level in the fair value hierarchy and the carrying value of liabilities not measured at fair value are as follows: Derivative Derivative Derivative Derivative Current Financial assets Currency pair Volume (million assets (million liabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million31 Decemberassets (million 2020 liabilities Non-deliverable foreign exchange forward contracts – cash flow hedges (sell/buy) US$) 39US$) (million– US$) 2020 USD/RUB(sell/buy) LevelUS$) 135 1 LevelUS$) 93 (millionCarrying US$)– Fair value Fair value value Non-deliverableOperating activities foreign exchange forward contracts 20 9 Operating activities Financial2020 liabilities BRL/USD 33 – – Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net Total current financial assets 59 9 •Financing RUB-denominated activities bonds payable 1,237 – 1,169 2020 USD/RUB 135 9 – 2020 USD/RUB 135 9 – Foreign• US$-denominated exchange non-deliverable bonds payable forward contracts, net 901 – 828 BRL/USD 33 – – BRL/USD 33 – – Non-current2020 Financial assets 2020• Long-term US$-denominated fixed interest loans USD/EUR 76– 630– 6008 Non-deliverable foreign exchange forward contracts 3 – Financing activities •2020Financing Long-term activities RUB-denominated fixed interest loans BRL/USD 32– 220– 2271 Cross-currency interest swaps 9 59 Foreign exchange non-deliverable forward contracts, net 2021•Foreign Long-term exchange BRL-denominated non-deliverable fixed forward interest contracts, loans net USD/EUR 80– –1 71 Total non-current financial assets 12 59 2020 USD/EUR 76 – 8 CrossTotal2020 financialcurrency liabilitiesinterest rate swaps, net USD/EUR 2,138 76 851– 2,8258 Total assets recurring fair value measurements 71 68 2020 BRL/USD 32 – 1 2020 USD/RUBBRL/USD 310 32 – 151 2020 2021 USD/EUR 80 – 7 2021 USD/EUR 8031 December 2019– 7 Financial liabilities 2022 USD/RUB 292 21 – Cross currency interest rate swaps, net Cross currency interest rate swaps, net Level 1 Level 3 Carrying Current Financial liabilities 2023 USD/RUB Fair value 511 Fair value 38 value– 2020 USD/RUB 310 – 15 2020 USD/RUB 310 – 15 Non-deliverable foreign exchange forward contracts 16 9 FinancialTotal derivative liabilities financial assets/liabilities – 68 33 2022 USD/RUB 292 21 – •2022 RUB-denominated bonds payable USD/RUB 1,110 292 21– 1,076– Commodity swaps 12 – The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: Commodity2023 collars USD/RUB 511 – 38 2 – 2023• US$-denominated bonds payable USD/RUB 1,020 511 38– 951– 2020 Cross-currencyTotal derivative interest financial swaps assets/liabilities – – 68 15 33 •Total Long-term derivative US$-denominated financial assets/liabilities fixed interest loans – 675 68 650 33 • Long-term RUB -denominated fixed interest loans Gain/(loss) – 34 37 TotalThe current impact financial of cash liabilitiesflow hedges of foreign currency risk on comprehensive income and profit or loss was as follows:28 26 The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: • Long-term BRL-denominated fixed interest loans recognised in from other – 11

2020 other comprehensive 2020 Total financial liabilities 2,130 Line 710 in the consolidated 2,715 Non-current Financial liabilities Gain/(loss) comprehensive incomeGain/(loss) to profit income or loss statement of profit or loss Non-deliverable foreign exchange forward contracts Gain/(loss) reclassified 3 7 The following information sets out the key inputs relevant to the determinationGain/(loss) of reclassifiedthe fair value of the liabilities for which fair value recognised in from other Financing activities recognised in from other Cross-currency interest swaps 101 – information is provided as a disclosure only. other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net Total non-current financial liabilities comprehensive income to profit 104Line in the consolidated7 comprehensive income to profit Line in the consolidated income or loss statement of profit or loss •Cross For US$currency and RUB-denominatedinterest rate swaps, bonds net traded on organised financialincome markets(3) (Irish stockor loss3 exchange andOther Moscow financialstatement Exchange), gain/(loss), of profit or netloss Total liabilities recurring fair value measurements 132 33 Financing activities FinancingOperatingquotations activitiesactivities or executable prices are used as the key inputs to fair value determinatio n. These instruments are included in Level 1 of the fair value hierarchy. DerivativeForeign financial exchange instruments non-deliverable which typicallyforward includecontracts, foreign net exchange forward(5) contracts, cross44 currency Otherinterest financial rate swaps gain/(loss),, net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net commodityCross currency swaps and interest collars, rate are swaps, carried net at fair value through profit or loss or(3) through other comprehensive3 Other income, financial depending gain/(loss), on net •TotalCross The currencyfair value interest of long-term rate swaps, loans andnet borrowings bearing a fixed interest(16)(3) rate is determined553 by a discountedOther financial cash flows gain/(loss), method. net whetherOperating these activitiesinstruments are effective hedging instruments (Note 2). The fair values are based on recurring mark-to-market OperatingThe discount activities factor applied to principal and interest repayments in the valuation model is calculated as a risk free rate at the Duringreporting the year date ended adjusted 31 December for the Group’s 2020, credit there risk. was The no materialGroup’s hedgecredit risk ineffectiveness. component in the discount factor at inception is assumed valuationsForeign provided exchange by non-deliverable the financial institutions forward contracts,which deal net in these financial instruments.(8) 8 Other operating income/(expenses), net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net to remain unchanged on the reporting date and is calculated as a difference between the contract interest rate and the risk-free The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: Total (16) 55 Totalinterest rate, in effect at loan inception date for debt instruments with (16)similar maturities.55 These instruments are included in Level 3 During the year ended 31 December 2020, there was no material hedge ineffectiveness. Duringof the the fair year value ended hierarchy. 31 December 2020, there was no material hedge ineffectiveness. 2020 As at 1 January – The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 As at 1 January – TaxAs at effect 1 January (5)– Effective portion of changes in fair value of cash flow hedges (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) Transfer of changes in fair value of cash flow hedges to profit or loss 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Tax effect (5) Tax effect (5) Total hedging reserve as at 31 December 34 Total hedging reserve as at 31 December 34

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EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

6 FAIR VALUE OF FINANCIAL INSTRUMENTS / CONTINUED 196 FAIRDERIVATIVE VALUE OFFINANCIAL FINANCIAL ASSETS INSTRUMENTS AND LIABILITIES / CONTINUED / CONTINUED During 2020 and 2019 there were no transfers between levels 1, 2 and 3 of the fair value hierarchy. As required by IAS 7 “Statement of cash flows”, the Group presents the reconciliation of movements31 Decemberin liabilities 2019 arising from financing activities: The Group’s financial assets and liabilities were as follows: Derivative assets Derivative liabilities (million US$) (million US$) 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED 19 DERIVATIVE FINANCIAL ASSETS ANDBank LIABILITIES / CONTINUED 31 December 31 December Operating activities borrowings 31 December 20192020 2019 and other Bonds Project 31Interest December 2019 Lease FINANCIAL ASSETS Derivative assets Derivative liabilities Commodity swaps and collars loans received issued FinanceDerivative payable assets liabilitiesDerivative liabilitiesTotal (million US$) (million US$) (million US$) (million US$) 2020Balance at 1 January 2020 2,491 2,027 489 42– 67 5,1162 Operating activities Operating activities Non-current financial assets Commodity swaps and collars Commodity swaps and collars Derivative Derivative Restricted cash 45 37 Cash flows 2020 – 2 2020 Currency pair Volume (million– assets (million liabilities2 Originated loans 1 1 Proceeds 1,823 470 (sell/buy)– US$)– US$)– (million2,293 US$)

Derivative financial assets 12 59 Operating activities (1,443) (333) (66) – (11) Derivative Derivative Repayments Derivative Derivative(1,853) Other non-current assets Currency pair Volume (million assets (million– liabilities4 PrepaidForeign exchangeand additional non-deliverable transaction costsforward contracts, net (8) (6) Currency pair(6) Volume (million– assets (million– liabilities(20) (sell/buy) US$) US$) (million US$) (sell/buy) US$) US$) (million US$) Total non-current financial assets 58 101 Interest2020 paid – – USD/RUB– (232) 135 (4)9 (236)– Operating activities Operating2020 activities BRL/USD 33 – – CurrentForeign financial exchange assets non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net Non-cashFinancing flowsactivities Restricted2020 cash USD/RUB 135 28 9 4 – Lease2020 liabilities arising due to new contracts – – USD/RUB– 135– 9 9– Foreign exchange non-deliverable forward contracts, net Trade receivables BRL/USD 33 493 – 444 – BRL/USD 33 – – 2020 2020Disposal of lease liabilities due to sale of USD/EUR 76 – 8 Originated loans 30 – subsidiaries – – – – (12) (12) Financing activities 2020Financing activities BRL/USD 32 – 1 Derivative financial assets total 59 9 Interest expenses accrued – – – 241 4 245 Foreign exchange non-deliverable forward contracts, net 2021Foreign exchange non-deliverable forward contracts, net USD/EUR 80 – 7 including cash flow hedges 39 – Amortisation of transaction costs 6 3 17 – – 26 2020 USD/EUR 76 – 8 2020 USD/EUR 76 – 8 Other receivables and other current assets including: CrossFinancial currency foreign interest exchange rate (gain)/loss, swaps, net net 115 23 152 – – 290 2020 BRL/USD 32 – 1 2020 BRL/USD 32 – 1 Other receivables 48 46 Currency2020 translation difference, net (129) (187) USD/RUB(85) 310(4) (4)– (409)15 2021 USD/EUR 80 – 7 2021 USD/EUR 80 – 7 Interest receivable – 1 Balance2022 at 31 December 2020 2,855 1,997 USD/RUB501 29247 49 21 5,449– CashCross and cashcurrency equivalents interest rate swaps, net 546 313 Cross2023 currency interest rate swaps, net USD/RUB 511 38 – 2020 USD/RUB 310 – 15 2020 USD/RUB 310 – 15 Total current financial assets 1,204 817 Total derivative financial assets/liabilities Bank – 68 33 Total2022 financial assets USD/RUB 292 1,262 21 918 – 2022 borrowings USD/RUB 292 21 – The impact of cash flow hedges of foreign currency risk andon comprehensiveother Bonds income andProject profit or lossInterest was as follows:Lease 2023 USD/RUB 511 38 – 2023 USD/RUB 511 38 – loans received issued Finance payable liabilities Total FINANCIALTotal derivative LIABILITIES financial assets/liabilities – 68 33 Total derivative financial assets/liabilities 2020 – 68 33 Balance at 1 January 2019 2,374 1,427Gain/(loss) 442 27 67 4,337

The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: Non-current financial liabilities Cash flows recognised in from other 2020 other comprehensive 2020 Bank borrowings and other loans received 1,588 1,405 Line in the consolidated Gain/(loss) Proceeds 1,258comprehensive 1,507 incomeGain/(loss) to profit 94 – – 2,859 income or loss statement of profit or loss Bonds issued Gain/(loss) reclassified 1,869 1,661 Repayments (1,160)Gain/(loss) (979) reclassified (36) – (10) (2,185) recognised in from other Financing activities recognised in from other Project Finance 433 435 Prepaid and additional transaction costs (2) (8) (6) – – (16) other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net Derivative financial liabilities comprehensive income to profit 104Line in the consolidated7 Interest paid comprehensive– –income to profit– (211) Line in (5) the consolidated (216) income or loss statement of profit or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss Other non-current liabilities including: Financing activities FinancingOperating activitiesactivities Contingent liability related to business combination – 173 Non-cash flows Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net Long-term portion of deferred payables related to mineral rights acquisition 11 11 Loans and lease liabilities acquired in a business Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net Long-term portion of lease payables 40 57 combination 3––– 14 Operating activities Operating activities Total non-current financial liabilities 4,045 3,749 LeaseDuring liabilities the year arisingended due31 December to new contracts 2020, there was no material–––– hedge ineffectiveness. 88 Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Interest expenses accrued – – – 224 5 229 Total (16) 55 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 Current financial liabilities Amortisation of transaction costs 7 6 19 – – 32 BankDuring borrowings the year and ended other 31 loans December received 2020, there was no material hedge ineffectiveness. 1,267 1,086 FinancialDuring the foreign year ended exchange 31 December (gain)/loss, 2020, net there was no material(8) hedge ineffectiveness. (35) (78) – –2020 (121) Project Finance 68 54 As at 1 January 19 113 54 2 1 189– The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: CurrencyThe impact translation of cash flow difference, hedges netof foreign currency risk on changes in equity was as follows: Bonds issued 128 366 OtherEffective movements portion of changes in fair value of cash flow hedges – (4) – – – (16)(4) 2020 2020 Derivative financial liabilities total 28 26 BalanceTransfer ofat changes31 December in fair 2019 value of cash flow hedges to profit2,491 or loss 2,027 489 42 67 5,11655 TradeAs payablesat 1 January 527 508 – Tax As at effect 1 January (5)– OtherEffective accounts portion payable of changes and accrued in fair expenses value of cash including: flow hedges (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16)

InterestTransfer payable of changes in fair value of cash flow hedges to profit or loss 47 42 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Short-termTax effect portion of lease payables 9 10 (5) Tax effect (5) Short-termTotal hedging portion reserve of deferred as at 31payables December related to acquisition of additional interest in subsidiary – 2 34 Total hedging reserve as at 31 December 34 Short-term portion of deferred payables related to mineral rights acquisition 1 2 Total current financial liabilities 2,075 2,096 Total financial liabilities 6,120 5,845

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

7 SEGMENT INFORMATION 197 DERIVATIVESEGMENT INFORMATION FINANCIAL ASSETS / CONTINUED AND LIABILITIES / CONTINUED The Group has a vertically integrated business model conducted by three operating divisions, representing reportable segments, The divisional capital expenditure on property, plant and equipment, intangible assets and mineral31 rights December for the 2019 years ended 31 which are Mining, Fertilizers and Commercial: December 2020 and 31 December 2019 were: Derivative assets Derivative liabilities (million US$) (million US$) • Mining19 division DERIVATIVE encompasses FINANCIAL the extraction of ASSETS ores to obtain AND apatite, LIABILITIES baddeleyite, iron-ore / CONTINUED concentrates and phosphorite; as well 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED 2020 2019 Operating activities as the potash production at the Verkhnekamskoe deposit that started in 2018 and the development 31of December the potassium 2019 salt deposit Mining 31 December 2019 553 514 (potash) at the Gremyachinskoe deposit. The division also includes the exploration and subsequentDerivative development assets of hydrocarbonsDerivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities Fertilizers 601 310 fields; (million US$) (million US$) (million US$) (million US$) 2020Commercial – 22 892 • FertilizersOperating division activities includes the production of mineral fertilizers (nitrogen, phosphate and complex) and industrial products; Operating activities Other 13 19 • CommercialCommodity division swaps andis responsible collars for the sale of the complete range of products produced by the Group as well as third-party Commodity swaps and collars Derivative Derivative Elimination Currency pair Volume (million assets (million(21) liabilities 18 products2020 through the Group’s global distribution network spanning across Europe, Russia, North and Latin– America, Central and 2 2020 – 2 Total capital expenditure (sell/buy) US$) 1,168US$) (million 950US$) South-East Asia. The division also covers all supply chain operations including different types of transportation services as well as Operating activities purchase and delivery of raw materials and finished goods. Derivative Derivative The analysis of non-current assets other than financial instruments, deferred income tax assets and other non-currentDerivative assets Derivativeby Currency pair Volume (million assets (million liabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million assets (million liabilities Activities not assigned to a particular division are reported in “Other”. These include certain service activities, central management geographical location was: (sell/buy) US$) US$) (million US$) 2020 USD/RUB(sell/buy) US$) 135 US$)9 (million US$)– and Operatingother items. activities Аll intersegment transactions and unrealised profit in inventory from intragroup sales are eliminated through Operating activities 31 December 31 December “Elimination”. 2020 BRL/USD 33 2020– 2019– Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net RussiaFinancing activities 7,106 7,697 The review of financial reports of the Group, evaluation of the operating results and allocation of resources between the operating 2020 USD/RUB 135 9 – Europe2020 USD/RUB 135 8989 820– divisions are performed by the Management Board (considered to be the chief operating decision maker in the Group). The Foreign exchange non-deliverable forward contracts, net 2020 BRL/USD 33 – – 2020 BRL/USD 33 – – development and approval of strategies, market and risk analysis, investment focus, technological process changes are undertaken 2020Kazakhstan USD/EUR 76 256– 2658 mostlyFinancing in accordance activities with the operating divisions. Budgets and financial reports are prepared in a standard format according to the Brazil2020Financing activities BRL/USD 32 188– 2421 Other countries 86 101 IFRSForeign accounting exchange policy non-deliverable adopted by the forwardGroup. Salescontracts, between net divisions are carried out on an arm’s length basis. 2021Foreign exchange non-deliverable forward contracts, net USD/EUR 80 – 7 2020 USD/EUR 76 – 8 2020Total USD/EUR 76 8,534– 9,1258 The Management Board assesses the performance of the operating divisions based on, among other factors, a measure of EBITDA Cross currency interest rate swaps, net (profit2020 before taxation adjusted by interest expense, depreciation and amortisation, financialBRL/USD foreign exchange 32 gain or loss,– other non- 1 2020The Group’s main manufacturing facilities are based in Russia, Lithuania, Belgium andUSD/RUBBRL/USD Kazakhstan. 310 32 – 151 cash2021 and one-off items, excluding profit attributed to non-controlling interests), allocatedUSD/EUR by division according 80 to internal rules.– Since 7 2021 USD/EUR 80 – 7 the EBITDA term is not a standard IFRS measure, EuroChem Group’s definition of EBITDA may differ from that of other companies. The2022 analysis of Group sales by region was: USD/RUB 292 21 – Cross currency interest rate swaps, net Cross currency interest rate swaps, net 2023 USD/RUB 511 2020 38 2019– The2020 division results for the year ended 31 December 2020 were: USD/RUB 310 – 15 2020 USD/RUB 310 – 15 EuropeTotal derivative financial assets/liabilities – 1,690 68 1,862 33 2022 ExternalUSD/RUB sales Internal sales 292 Total sales 21 EBITDA – 2022 USD/RUB 292 21 – LatinThe impact America of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows:1,530 1,522 Mining USD/RUB45 1,027 511 1,072 38 532 – USD/RUB 511 38 – 2023 North2023 America 971 991 Fertilizers 29 2,916 2,945 743 2020 Total derivative financial assets/liabilities – 68 33 RussiaTotal derivative financial assets/liabilities – 836 68 1,056 33 Commercial 6,089 243 6,332 551 Gain/(loss) The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: AsiaThe impactPacific of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows:1,004 649 Other 3 11 14 14 recognised in from other Africa 135 104 2020 other comprehensive 2020 Elimination – (4,197) (4,197) (31) Line in the consolidated Gain/(loss) Total sales comprehensive incomeGain/(loss) to profit 6,166 6,184 income or loss statement of profit or loss Total Gain/(loss) reclassified6,166 – 6,166 1,809 Gain/(loss) reclassified recognised in from other TheFinancing sales are activities allocated to regions based on the destination country. recognised During in the yearfrom ended other 31 December 2020, the Group had sales The division results for the year ended 31 December 2019 were: other comprehensive Foreignin excess exchange of 10% to non-deliverable Brazil, Russia, the forward United contracts, States of net America and China,other(5) representing comprehensive 21.7%,44 13.6%, 12.9%Other and financial 11.3% of gain/(loss), total net comprehensive income to profit Line in the consolidated comprehensive income to profit Line in the consolidated income External salesor loss Internal sales Total statementsales of profit EBITDA or loss revenues,Cross currency respectively interest (2019: rate swaps, sales tonet Brazil, Russia and the United Statesincome(3) of America,or representing loss3 20.7%,Other 17.1% financialstatement and 12.4% gain/(loss), of profitof the or totalnetloss MiningFinancing activities 48 945 993 478 Financingrevenues,Operating respectively). activitiesactivities FertilizersForeign exchange non-deliverable forward contracts, net (5) 6744 3,282 Other financial 3,349 gain/(loss), 894 net DuringForeign 2020 exchange and 2019 non-deliverable there were noforward sales contracts,in excess ofnet 10% to one customer.(5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net CommercialCross currency interest rate swaps, net (3) 6,0723 274 Other 6,346financial gain/(loss), 245 net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net OtherOperating activities 5 10 15 (117) Operating activities During the year ended 31 December 2020, there was no material hedge ineffectiveness. EliminationForeign exchange non-deliverable forward contracts, net (8) (8)*8 Other (4,511) operating (4,519)income/(expenses), 45 net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net TotalTotal (16) 6,18455 – 6,184 1,545 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 * Elimination of revenue earned before an asset is ready for its intended use During the year ended 31 December 2020, there was no material hedge ineffectiveness. During the year ended 31 December 2020, there was no material hedge ineffectiveness. 2020 A reconciliation of EBITDA to profit before taxation is provided below: As at 1 January – The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: Note 2020 2019 Effective portion of changes in fair value of cash flow hedges (16) EBITDA 1,809 1,5452020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 As at 1 January – TaxAs at effect 1 January (5)– DepreciationEffective portionand amortisation of changes in fair value of cash flow hedges 26 (441) (389) (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) (Impairment)/reversalTransfer of changes of impairment/(write-off)in fair value of cash flow of idlehedges property, to profit plant or andloss equipment 24, 27 (9) (7) 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Non-recurringTax effect income/(expenses), net 27 11 38 (5) Tax effect (5) Gain/(loss)Total hedging from sale reserve of subsidiaries, as at 31 December net 190 – 34 Total hedging reserve as at 31 December 34 COVID-19 associated expenses 27 (19) – Interest expense (254) (175) Financial foreign exchange gain/(loss), net (441) 168 Other financial gain/(loss), net 28 (286) 58 Non-controlling interest 1 1 Profit before taxation 561 1,239

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

8 PROPERTY, PLANT AND EQUIPMENT 198 PROPERTY,DERIVATIVE PLANT FINANCIAL AND ASSETSEQUIPMENT AND / LIABILITIES CONTINUED / CONTINUED Machinery Movements in the carrying amount of property, plant and equipment were: 31 December 2019 Land and Land Transfer and Assets under Machinery Buildings Improvements devices equipmentDerivative Transport assets Other constructionDerivative liabilities Total (million US$) (million US$) 19 DERIVATIVE FINANCIAL ASSETSLand andAND Land LIABILITIESTransfer /and CONTINUED Assets under 19Cost DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED Buildings Improvements devices equipment Transport Other construction Total Operating activities Cost 31 December 2019 Balance at 1 January 2019 914 990 295 2,100 25331 December 137 2019 3,697 8,386 Derivative assets Derivative liabilities CommodityAdditions and swaps transfers and collarsfrom assets under Derivative assets Derivative liabilities Balance at 1 January 2020 1,436 1,793 657 3,275 399 207 2,566 10,333 (million US$) (million US$) 2020construction 421 664 324 1,018(million 126 US$)– 56 (1,503)(million 1,106 US$)2 AdditionsOperating and transfersactivities from assets under Operating activities construction 234 82 63 262 98 48 443 1,230 Additions through business combination 1 – – 2 – – 1 4 Commodity swaps and collars Commodity swaps and collars Derivative Derivative – Disposals (2) (6) (5) (47) (14) (1) (1) (76) Disposals (3) (5) (4) (26) (13) (1) (52) Currency pair Volume (million assets (million liabilities 2020 – 2 2020 Changes in estimates of asset retirement (sell/buy) US$)– US$) (million US$)2 Disposal of assets due to sale of obligations (Note 21) – 19 – – – – – 19 – Operating activities subsidiaries (37) (47) (3) (26) (2) Derivative(9) Derivative(124) (Impairment)/reversal of impairment/(write- Derivative Derivative Foreign exchange non-deliverable forward contracts, net Changes in estimates of asset retirement Currency pair Volume (million assets (million liabilities off) of idle property, plant and equipment – – –Currency (3) pair Volume –(million assets – (million (6)liabilities (9) (sell/buy) US$) US$) (million US$) (sell/buy) US$) US$) (million US$) obligations (Note 21) – (4) – – – – – (4) Currency2020 translation difference 102 126 43USD/RUB 205 34 135 15 9 378 903– Operating activities Operating activities (Impairment)/reversal of impairment/(write- Balance2020 at 31 December 2019 1,436 1,793 657BRL/USD 3,275 399 33 207 2,566– 10,333– off) ofForeign idle property, exchange plant non-deliverable and equipment forward contracts,(1) net – – (1) 1 – (8) (9) Foreign exchange non-deliverable forward contracts, net Financing activities Currency2020 translation difference (205) (249) (91) (408)USD/RUB (62) 135(29) (397)9 (1,441) – 2020 USD/RUB 135 9 – AForeignccumulated exchange Depreciation non-deliverable forward contracts, net Balance2020 at 31 December 2020 1,424 1,570 622 3,076BRL/USD423 223 33 2,595– 9,933 – 2020 BRL/USD 33 – – Balance2020 at 1 January 2019 (167) (159) (145)USD/EUR (977) (122) 76 (81) – – (1,651)8

Financing activities Charge2020Financing for activitiesthe year (55) (50) (32)BRL/USD (223) (28) 32 (17) – – (405)1 Accumulated Depreciation Foreign exchange non-deliverable forward contracts, net 2021DisposalsForeign exchange non-deliverable forward contracts,2 net 6 5USD/EUR 47 13 80 1 – – 747 Balance2020 at 1 January 2020 (236) (221) (185) (1,244)USD/EUR(151) (105) 76 – (2,142) 8 (Impairment)/reversal2020 of impairment/(write- USD/EUR 76 – 8 Cross currency interest rate swaps, net Charge for the year (62) (61) (41) (248) (33) (20) – (465) off) of idle property, plant and equipment – – – 2 – – – 2 2020 BRL/USD 32 – 1 2020 USD/RUBBRL/USD 310 32 – 151 Disposals 3 5 3 26 14 1 – 52 Currency translation difference (16) (18) (13) (93) (14) (8) – (162) 2021 USD/EUR 80 – 7 20212022 USD/RUBUSD/EUR 292 80 21– –7 Disposal of assets due to sale of Balance at 31 December 2019 (236) (221) (185) (1,244) (151) (105) – (2,142) subsidiariesCross currency interest rate swaps, net 12 14 2 17 – 2 – 47 Cross2023 currency interest rate swaps, net USD/RUB 511 38 –

(Impairment)/reversal2020 of impairment/(write- USD/RUB 310 – 15 2020Total derivative financial assets/liabilities USD/RUB 310– 68– 3315 Net Carrying Value off) of2022 idle property, plant and equipment – – – USD/RUB– – 292– 21– – – 2022 USD/RUB 292 21 – BalanceThe impact at 1of January cash flow 2019 hedges of foreign currency747 risk on comprehensive 831 150 income and 1,123 profit or loss 131 was as 56 follows: 3,697 6,735 Currency2023 translation difference 27 28 21 USD/RUB132 21 51114 38– 243 – 2023 USD/RUB 511 38 – Balance at 31 December 2019 1,200 1,572 472 2,031 248 102 2,566 8,191 BalanceTotal at derivative 31 December financial 2020 assets/liabilities (256) (235) (200) (1,317) (149) (108)– 68– (2,265) 33 Total derivative financial assets/liabilities 2020 – 68 33 Gain/(loss) The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: EvaluationThe impact of and cash exploration flow hedges expenditures of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: Net Carrying Value Potash fields. At 31 December 2020, the Group has capitalised recognisedexpenses inrelating fromto the other evaluation and exploration stages of 2020 other comprehensive 2020 Balance at 1 January 2020 1,200 1,572 472 2,031 248 102 2,566 8,191 the potash fields of US$63 million, including borrowing costs capitalised of US$8 million (31 December 2019: US$61Line million, in the consolidated including Gain/(loss) comprehensive incomeGain/(loss) to profit borrowing costs capitalised of US$7 million). income or loss statement of profit or loss Balance at 31 December 2020 1,168 1,335 Gain/(loss)422 1,759reclassified 274 115 2,595 7,668 Gain/(loss) reclassified recognised in from other Financing activities recognised in from other Hydrocarbons fields. At 31 December 2020, the Group has capitalised expenses relating to the evaluation and exploration stages of other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net comprehensive income to profit Line in the consolidated the hydrocarbon fields of US$45 million (31 December 2019: US$31comprehensive million). income to profit Line in the consolidated income or loss statement of profit or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss These expenses were included in the assets under construction of “Property, plant and equipment” in the consolidated statement of Financing activities FinancingOperating activitiesactivities financial position. Substantially, these costs have been paid in the same period when incurred. Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net BorrowingTotalCross currency costs interest capitalised rate swaps, net (16)(3) 553 Other financial gain/(loss), net Operating activities DuringOperating the activitiesyear ended 31 December 2020, borrowing costs totalling US$14 million were capitalised in property, plant and equipment During the year ended 31 December 2020, there was no material hedge ineffectiveness. Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net atForeign an average exchange interest non-deliverable rate of 5.14% forward p.a. (2019: contracts, US$81 millionet n capitalised at(8) an average interest8 Other rate ofoperating 5.28% p.a.). income/(expenses), net The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: Total (16) 55 Total (16) 55 During the year ended 31 December 2020, there was no material hedge ineffectiveness. During the year ended 31 December 2020, there was no material hedge ineffectiveness. 2020 As at 1 January – The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 As at 1 January – TaxAs at effect 1 January (5)– Effective portion of changes in fair value of cash flow hedges (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) Transfer of changes in fair value of cash flow hedges to profit or loss 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Tax effect (5) Tax effect (5) Total hedging reserve as at 31 December 34 Total hedging reserve as at 31 December 34

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

8 PROPERTY, PLANT AND EQUIPMENT / CONTINUED 199 MINERALDERIVATIVE RIGHTS FINANCIAL ASSETS AND LIABILITIES / CONTINUED Leases 31 December 31 December 31 December 2019 2020 2019 The right-of-use assets mainly comprised land plots and buildings lease contracts and amounted to US$47 million as at 31 December Derivative assets Derivative liabilities Rights for exploration and production: 202019 (31 December DERIVATIVE 2019: US$67 FINANCIAL million). Movements ASSETS in the ANDcarrying LIABILITIES amount of right-of-use / CONTINUED assets during 2020 and 2019 were as 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED(million US$) (million US$) follows: OperatingVerkhnekamskoe activities potash deposit 58 69 31 December 2019 Gremyachinskoe potash deposit 31 December 2019 62 73 LandDerivative and Land assets Machinery and Derivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities Kok-Jon and Gimmelfarbskoe phosphate deposits 9 11 Buildings Improvements(million US$) equipment (million Total US$) 2020 (million US$)– (million US$)2 BalanceOperating at 1 January activities 2020 24 36 7 67 OperatingGeres phosphate activities deposit 19 21

Kovdorsky apatite deposit 22 AdditionsCommodity swaps and collars 4 4 1 9 Commodity swaps and collars Derivative Derivative Disposal of assets due to sale of subsidiaries – (10) (3) (13) Rights for exploration, evaluation and extraction: Currency pair Volume (million assets (million liabilities 2020 – 2 2020 (sell/buy) US$)– US$) (million US$)2 Modifications 1 – – 1 Belopashninskiy potash deposit 12 14 Operating activities Depreciation charge for the period (9) (2) Derivative(2) Derivative(13) Ozinsky hydrocarbon deposit Derivative34 Derivative Currency translation differences Currency(2) pair Volume (million(1) assets (million(1) liabilities(4) RightsForeign for exchange proven and non-deliverable unproven mineral forward resources: contracts, net Currency pair Volume (million assets (million liabilities (sell/buy) US$) US$) (million US$) (sell/buy) US$) US$) (million US$) Balance at 31 December 2020 18 27 2 47 2020Astrakhan hydrocarbon deposit USD/RUB 135 1169 139– Operating activities Operating activities 2020Kamenkovsky hydrocarbon deposit BRL/USD 33 30– 32– Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net Land and Land Machinery and TotalFinancing mineral activities rights 311 365 2020 BuildingsUSD/RUBImprovements 135 equipment 9 Total – 2020 USD/RUB 135 9 – UnderForeign the exchange terms of non-deliverable valid licences for forward the exploration contracts, and net development of mineral resource deposits, the Group is required to comply Balance2020 at 1 January 2019 BRL/USD25 37 33 7 – 69 – 2020 BRL/USD 33 – – with2020 a number of conditions, including preparation of design documentation, commencemenUSD/EURt of the construction 76 of mining– facilities 8 Additions 5 – 2 7 Financing activities and2020Financing commencement activities of the extraction of mineral resources by certain dates. If the GroupBRL/USD fails to materially 32 comply with– the terms of 1 Additions through business combination 1 – – 1 the licence agreements there are circumstances whereby the licences can be revoked. Management of the Group believes that the Foreign exchange non-deliverable forward contracts, net 2021Foreign exchange non-deliverable forward contracts, net USD/EUR 80 – 7 Modifications2020 USD/EUR– – 76 – – – 8 Group2020 faces no material regulatory risks in relation to the validity and operation of USD/EURany of its licences. 76 – 8 Depreciation charge for the period (8) (2) (2) (12) Cross currency interest rate swaps, net 2020 BRL/USD 32 – 1 2020 BRL/USD 32 – 1 Currency translation differences 1 1 – 2 2020Verkhnekamskoe potash deposit USD/RUB 310 – 15 2021 USD/EUR 80 – 7 2021In accordance with the conditions of licence agreement and related licence amendmentsUSD/EUR for developing 80 the potash sites,– the Group7 2022 USD/RUB 292 21 – Balance at 31 December 2019 24 36 7 67 has major commitments in respect of the timing for the potash extraction. Cross currency interest rate swaps, net Cross2023 currency interest rate swaps, net USD/RUB 511 38 – The2020 leases resulting from lease contracts which are not capitalised and are recognisedUSD/RUB in profit or loss for 3102020 and 2019 –years were 15 The2020 Group is in compliance with the licence terms, commenced production activitiesUSD/RUB and continues construction 310 and mining– activities15 as follows: Total derivative financial assets/liabilities – 68 33 2022 USD/RUB 292 21 – at2022 Verkhnekamskoe potash deposit. USD/RUB 292 21 – The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: 2023 USD/RUB 511 2020 38 2019 – As2023 at 31 December 2020, the carrying amount of property, plant and equipment (includingUSD/RUB construction 511 in progress) related 38 to – ExpensesTotal derivative relating to financialvariable leaseassets/liabilities payments – 3 68 10 33 VerkhnekamskoeTotal derivative financial potash depositassets/liabilities was US$1,743 million (2019: US$2,060 million). 2020 – 68 33 Expenses relating to short-term leases – 2 Gain/(loss) The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: GremyachinskoeThe impact of cash potashflow hedges deposit of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: Expenses relating to lease of low-value assets 4 2 recognised in from other In accordance with the conditions of licence agreement and related licence amendments for developing the potash deposit, Total 2020 7 14 other comprehensive 2020 Line in the consolidated Gain/(loss) the Group has major commitments in respect of the timing for comprehensivethe construction income of theGain/(loss) to mining profit facilities and for the potash extraction. income or loss statement of profit or loss As at 31 December 2020, the Group had future minimum undiscountedGain/(loss) lease payments reclassified under non-cancellable operating lease Gain/(loss) reclassified The Group is in compliance with the licence terms and continues with construction of the mining and surface facilities at site. contracts of US$56 million (31 December 2019: US$79 million). Theserecognised payments in were fromnot includedother in the measurement of lease Financing activities recognised in from other other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net liabilities as being variable payments and based on cadastral valuecomprehensive of land. income to profit Line in the consolidated Management believes that each stage under the current licencecomprehensive terms for Gremyachinskoe income to profit potash deposit developmentLine in the will consolidated be income or loss statement of profit or loss completedCross currency according interest to rate the schedules.swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss Lease liabilities comprise current and non-current portions as follows: Financing activities FinancingOperating activitiesactivities As at 31 December 2020, Gremyachinskoe potash deposit was in the development phase with the shaft sinking completed for two Foreign exchange non-deliverable forward contracts, net (5) 44 Other31 December financial 31gain/(loss), December net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net 2020 2019 shafts at Gremyachinskoe while the third shaft has been delayed due to a water inflow which is being managed. Management has Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net Current 9 10 Totalworked out a program which will allow the Group to continue sinking at the(16) third shaft without55 breaching any of the terms of the Operating activities Operatinglicence agreement activities for Gremyachinskoe deposit. Non-current 40 57 During the year ended 31 December 2020, there was no material hedge ineffectiveness. Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net As at 31 December 2020, the carrying amount of property, plant and equipment (including construction in progress) related to Total lease liabilities 49 67 The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: Total (16) 55 TotalGremyachinskoe potash deposit was US$1,786 million (2019: US$1,876 million).(16) 55 Interest expense accrued on lease liabilities amounted to US$4 million for the year ended 31 December 2020 (2019: US$5 million). 2020 During the year ended 31 December 2020, there was no material hedge ineffectiveness. DuringFor the thepurpose year endedof impairment 31 December testing 2020, of the there Verkhnekamskoe was no material and hedge Gremyachinskoe ineffectiveness. potash deposits management has compared the As at 1 January – The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: Therecoverable impact of amount cash flow of the hedges non-current of foreign assets currency related risk to onthese changes projects, in equity determined was as as follows: their value in use with consideration of a Effectiverecent industry portion outlook of changes and thein fair operational value of cashplans, flow with hedges the carrying amount of these assets and concluded that no impairment should(16) 2020 Transferbe recognised of changes in respect in fair of value these of assets cash flow as at hedges 31 December to profit 20 or20 loss and 31 December 2019. 202055 As at 1 January – TaxAs at effect 1 January (5)–

Effective portion of changes in fair value of cash flow hedges (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) Transfer of changes in fair value of cash flow hedges to profit or loss 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Tax effect (5) Tax effect (5) Total hedging reserve as at 31 December 34 Total hedging reserve as at 31 December 34

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

10 GOODWILL 1911 DERIVATIVEINTANGIBLE FINANCIALASSETS ASSETS AND LIABILITIES / CONTINUED Movements in goodwill arising from the acquisition of subsidiaries are: Movements in the carrying amount of intangible assets were: 31 December 2019 2020 2019 Know-how and DerivativeAcquired assets Derivative liabilities (million US$) (million US$) Carrying19 amount DERIVATIVE at 1 January FINANCIAL ASSETS AND LIABILITIES / CONTINUED 469 476 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIESproduction /Customer CONTINUED software and Trademarks Operating activities technology relationships licences and others Total 31 December 2019 Cost 31 December 2019 Acquisition of subsidiaries Derivative assets – Derivative liabilities4 Commodity swaps and collars Derivative assets Derivative liabilities (million US$) (million US$) (million US$) (million US$) Disposal of subsidiaries (2) – 2020 – 2 Operating activities OperatingBalance at activities1 January 2020 99 121 32 46 298

Currency translation difference – (11) Additions – – – 12 12 Commodity swaps and collars Commodity swaps and collars Derivative Derivative Carrying amount at 31 December 467 469 Disposals – Currency pair– Volume (million(1) assets (million(4) liabilities(5) 2020 – 2 2020 – 2 Currency translation difference 4 (sell/buy)(2) US$)– US$)3 (million US$)5 Goodwill impairment test Operating activities Goodwill is allocated to cash-generating units (CGUs) which represent the lowest level within the Group at which theDerivative goodwill is Derivative Balance at 31 December 2020 103 119 31 Derivative57 Derivative310 monitored by management and which are not larger than a segment, as follows: Currency pair Volume (million assets (million liabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million assets (million liabilities (sell/buy) US$) US$) (million US$) (sell/buy) US$) US$) (million US$) A2020ccumulated Depreciation USD/RUB 135 9 – Operating activities 31 December 31 December Operating activities 2020 2019 Balance2020 at 1 January 2020 (91) BRL/USD(75) (32) 33 (25)– (223)– Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net EuroChem Antwerpen NV 317 289 ChargeFinancing for activitiesthe year (4) (8) – (4) (16) 2020 USD/RUB 135 21 9 19 – Disposals2020 – USD/RUB– 1351 92 –3 EuroChem Agro GmbH Foreign exchange non-deliverable forward contracts, net BRL/USD 33 – – BRL/USD 33 – – EuroChem2020 North America Corp. 21 21 2020Currency translation difference (6) USD/EUR(4) 76– – (10)8 92 118 Balance at 31 December 2020 (101) (87) (31) (27) (246) FertilizantesFinancing Tocantins activities S.A. 2020Financing activities BRL/USD 32 – 1 EuroChem-Project, LLC 9 11 Foreign exchange non-deliverable forward contracts, net 2021Foreign exchange non-deliverable forward contracts, net USD/EUR 80 – 7 Azottech, LLC 3 4 Net Carrying Value 2020 USD/EUR 76 – 8 Cross2020 currency interest rate swaps, net USD/EUR 76 – 8 Emerger Fertilizantes S.A. 1 2 Balance at 1 January 2020 8 46 – 21 75 2020 BRL/USD 32 – 1 2020 USD/RUBBRL/USD 310 32 – 151 3 5 2020 Other2021 USD/EUR 80 – 7 2021Balance at 31 December 2020 2 USD/EUR32 80– 30– 647 Total carrying amount of goodwill 467 469 2022 USD/RUB 292 21 – Cross currency interest rate swaps, net Cross currency interest rate swaps, net 2023 Know-how and USD/RUB Acquired 511 38 – The2020 recoverable amount of each CGU was determined based on value-in-use calculations.USD/RUB These calculations 310 use cash flow– 15 2020 production USD/RUBCustomer software 310and Trademarks– 15 Total derivative financial assets/liabilities technology relationships licences– and others 68Total 33 projections2022 based on development strategy and financial budgets approved by managementUSD/RUB covering a five-year 292 period. 21Cash flows – 2022 USD/RUB 292 21 – beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rates do not exceed the CostThe impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: 2023 USD/RUB 511 38 – 2023 USD/RUB 511 38 – long-term average growth rate for the business sector of the economy in which the CGU operates. Total derivative financial assets/liabilities – 68 33 Total derivative financial assets/liabilities 2020 – 68 33 Management determined budgeted prices and expenses based on past performance and industry and market expectations which Balance at 1 January 2019 101Gain/(loss) 125 32 40 298 The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: AdditionsThe impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) income– reclassified and profit– or loss was– as follows: 4 4 included impact of COVID-19. The weighted average growth rate used is consistent with the forecasts included in latest industry recognised in from other reports. 2020 Currency translation difference other (2)comprehensive (4) 2020 – 2 (4) Line in the consolidated Gain/(loss) Balance at 31 December 2019 comprehensive 99incomeGain/(loss) to profit 121 32 46 298 Assumptions used for value-in-use calculations are listed below: income or loss statement of profit or loss Gain/(loss) reclassified Gain/(loss) reclassified recognised in from other Financing activities recognised in from other 31 December 31 December Accumulated Depreciation other comprehensive 2020 2019 Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net comprehensive income to profit Line in the consolidated Balance at 1 January 2019 comprehensive(82) income to profit (64) (31) Line (20) in the consolidated (197) Adjusted US$ WACC rates, % p.a. income or loss 6.77%-9.49%statement 6.59%-9.74% of profit or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss Charge for the year (11) (13) (1) (4) (29) AdjustedFinancing BRL WACCactivities rates, % p.a. 10.07% 9.72% FinancingOperating activitiesactivities Disposals ––– –– Long-termForeign EUR exchange annual non-deliverableinflation rate, % forwardp.a. contracts, net (5) 44 1.30%-1.80%Other financial 1.70%-2.00% gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net Currency translation difference 2 2 – (1) 3 Long-termCross currency US$ annual interest inflation rate rate,swaps, % p.a. net (3) 3 Other2.20% financial 2.20%-2.70% gain/(loss), net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net Long-termOperating BRL activities annual inflation rate, % p.a. 4.00% 4.00%-4.10% BalanceOperating at activities31 December 2019 (91) (75) (32) (25) (223) During the year ended 31 December 2020, there was no material hedge ineffectiveness. EstimatedForeign nominal exchange growth non-deliverable rate beyond forwardthe five-year contracts, period, net % p.a. (8) 8 Other operating2.20% income/(expenses), 2.20% net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Total (16) 55 NetTotalThe Carryingimpact of Valuecash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 Performed calculations showed significant excess of recoverable amounts over respective carrying values of each CGU and the Balance at 1 January 2019 19 61 1 20 101 changes of 5 bps in the key assumptions will not lead to the impairment. 2020 During the year ended 31 December 2020, there was no material hedge ineffectiveness. BalanceDuring the at year31 December ended 31 2019December 2020, there was no material hedge ineffectiveness.8 46 – 21 75 As at 1 January – The Group did not recognise any goodwill impairment at 31 December 2020 and 31 December 2019. The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) 2020 12Transfer INVENTORIES of changes in fair value of cash flow hedges to profit or loss 202055 As at 1 January – TaxAs at effect 1 January (5)– 31 December 31 December Effective portion of changes in fair value of cash flow hedges (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 2020 201934(16) Transfer of changes in fair value of cash flow hedges to profit or loss 55 FinishedTransfer ofgoods changes in fair value of cash flow hedges to profit or loss 662 76255 Tax effect (5) TaxMaterials effect 240 226(5) Total hedging reserve as at 31 December 34 TotalCatalysts hedging reserve as at 31 December 106 10434 Work in progress 80 87 Less: provision for obsolete and damaged inventories (7) (9) Total inventories 1,081 1,170

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13 TRADE RECEIVABLES, PREPAYMENTS, OTHER RECEIVABLES 1913 DERIVATIVETRADE RECEIVABLES, FINANCIAL PREPAYMENTS, ASSETS AND LIABILITIES OTHER RECEIVABLES / CONTINUED AND OTHER CURRENT ASSETS AND OTHER CURRENT ASSETS / CONTINUED 31 December 2019 31 December 31 December Analysis of credit quality of trade receivables is presented in Note 33. Derivative assets Derivative liabilities 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED 2020 2019 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED(million US$) (million US$) Trade receivables OperatingThe movements activities in the ECL allowance/provision for impairment of accounts receivable were: 31 December 2019 31 December 2019 Trade receivables denominated in US$ Derivative assets 354 Derivative 280 liabilities Commodity swaps and collars Derivative assets TradeDerivative liabilitiesOther receivables receivables Trade receivables denominated in EUR (million US$) 60 (million 56 US$) 2020 (million US$)– (million US$)2 TradeOperating receivables activities denominated in RUB 32 74 OperatingAs at 1 January activities 2020 25 12 ECL allowance/provision for impairment 2 2 TradeCommodity receivables swaps denominated and collars in BRL 56 47 Commodity swaps and collars Derivative Derivative Trade receivables denominated in other currencies 7 12 Write-offs Currency pair Volume (million assets (million (5) liabilities (3) 2020 – 2 2020 (sell/buy) US$)– US$) (million US$)2 Less: ECL allowance (16) (25) ECL allowance/provision for impairment reversed (5) – CurrencyOperating translation activities difference (1) (2) Total trade receivables Derivative493 Derivative 444 Derivative Derivative Currency pair Volume (million assets (million liabilities TotalForeign ECL exchange allowance/provision non-deliverable for forwardimpairment contracts, of accounts net receivable as at 31 DecemberCurrency pair 2020 Volume (million assets (million16 liabilities9

(sell/buy) US$) US$) (million US$) (sell/buy) US$) US$) (million US$) Prepayments, other receivables and other current assets 2020 USD/RUB 135 9 – Operating activities Operating activities Trade Other Advances to suppliers 96 98 2020 BRL/USD 33 receivables– receivables– Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net VAT recoverable and receivable 157 150 AFinancings at 1 January activities 2019 22 13 2020 USD/RUB 135 9 – 2020 USD/RUB 135 9 – Other taxes receivable 6 7 ECLForeign allowance/provision exchange non-deliverable for impairment forward contracts, net 53 2020 BRL/USD 33 – – 2020 BRL/USD 33 – – Other receivables and other current assets 86 92 Write-offs2020 USD/EUR 76 –(1) (2)8 ReceivableFinancing for activitiessale of subsidiaries (Note 31) 288 – ECL2020Financing allowance/provision activities for impairment reversed BRL/USD 32 –(1) (3)1 InterestForeign receivable exchange non-deliverable forward contracts, net – 1 2021CurrencyForeign exchange translation non-deliverable difference forward contracts, net USD/EUR 80 ––17 Less:2020 provision for impairment USD/EUR 76 (9) – (12) 8 2020 USD/EUR 76 – 8 CrossTotal ECLcurrency allowance/provision interest rate swaps, for impairmentnet of accounts receivable as at 31 December 2019 25 12 Total prepayments, other receivables and other current assets 624 336 2020 BRL/USD 32 – 1 2020 USD/RUBBRL/USD 310 32 – 151 Total trade receivables, prepayments, other receivables and other current assets 1,117 780 2021 USD/EUR 80 – 7 1420212022 CASH AND CASH EQUIVALENTS, FIXED-TERM DEPOSITSUSD/RUBUSD/EUR AND RESTRICTED 292 80 21– CASH –7 ManagementCross currency believes interest that therate fair swaps, value net of accounts receivable does not differ significantly from their carrying amounts. Cross currency interest rate swaps, net 31 December 31 December 2023 USD/RUB 511 2020 38 2019– 2020 USD/RUB 310 – 15 2020 USD/RUB 310 – 15 During 2020 and 2019 the Group entered into a number of non-recourse factoring arrangements according to which the trade BankTotal balancesderivative denominated financial assets/liabilities in US$ – 189 68 170 33 receivables2022 were sold to a factoring company and, thus, derecognised in the consolidatedUSD/RUB statement of financial 292 position. 21 As at 31 – 2022 USD/RUB 292 21 – BankThe impact balances of cash denominated flow hedges in RUB of foreign currency risk on comprehensive income and profit or loss was as follows: 5 10 December2023 2020, trade receivables of US$116 million were sold (31 December 2019: US$135USD/RUB million). 511 38 – Bank2023 balances denominated in EUR USD/RUB 511 24 38 18– Total derivative financial assets/liabilities – 68 33 Total derivative financial assets/liabilities 2020 – 68 33 As at 31 December 2020, trade receivables grouped by past due with respective ECL allowance were as follows: Bank balances denominated in other currencies Gain/(loss) 13 16 The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: TermThe impact deposits of cash denominated flow hedges in US$ of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows:273 66 Trade ECL recognised in from other receivables allowance Term deposits denominated in RUB 20 6 2020 other comprehensive 2020 Line in the consolidated Current Gain/(loss) 451 (2) Term deposits denominated in other currencies comprehensive incomeGain/(loss) to profit 22 27 income or loss statement of profit or loss Less than 3 months Gain/(loss) reclassified 31 (1) Total cash and cash equivalents Gain/(loss) reclassified 546 313 recognised in from other Financing activities recognised in from other From 3 to 12 months 10 (3) other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net Over 12 months comprehensive income to profit Line17 in the consolidated(11) Current restricted cash comprehensive income to profit Line 28in the consolidated4 income or loss statement of profit or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss Total 509 (16) Non-current restricted cash 45 37 Financing activities FinancingOperating activitiesactivities Total restricted cash 73 41 As atForeign 31 December exchange 2019, non-deliverable trade receivables forward grouped contracts, by past net due with respective(5) ECL allowance44 were as follows:Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net Cross currency interest rate swaps, net (3) 3 Other financialTrade gain/(loss),ECL net TermTotalCross depositscurrency as interest at 31 December rate swaps, 2020 net and 31 December 2019 were held(16)(3) to meet short-term553 cash needsOther and financial had various gain/(loss), original net Operating activities receivables allowance maturitiesOperating but activities could be withdrawn on request without any restrictions. During the year ended 31 December 2020, there was no material hedge ineffectiveness. CurrentForeign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses),406 (6) net Fixed-termForeign exchange deposits non-deliverable as at 31 December forward 2020 contracts, and 31 December net 2019 had(8) various original 8maturities Other operating and could income/(expenses), be withdrawn with annet LessTotal than 3 months (16) 55 29 (3) earlyTotalThe impact notification of cash and/or flow withhedges a penalty of foreign accrued currency or interest risk on income changes forfeited. in equity(16) was as follows:55 From 3 to 12 months 13 (1) During the year ended 31 December 2020, there was no material hedge ineffectiveness. TheDuring credit the qualityyear ended of bank 31 Decemberbalances, term 2020, and there fixed-term was no deposits material whichhedge is ineffectiveness. based on the credit ratings of independent rating agencies,2020 Over 12 months 21 (15) AStandards at 1 January & Poor’s and Fitch Ratings, was as follows*: – TotalThe impact of cash flow hedges of foreign currency risk on changes in equity was as follows: 469 (25) EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) 31 December 31 December 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 2020 2020201955 As at 1 January – TaxA sto at effectAAA 1 January rated 136 97(5)– Effective portion of changes in fair value of cash flow hedges (16) TotalBB-Effective to hedging BBB+ portion rated reserve of changes as at in31 fair December value of cash flow hedges 471 24034(16) Transfer of changes in fair value of cash flow hedges to profit or loss 55 B-Transfer to B+ ratedof changes in fair value of cash flow hedges to profit or loss 1255 Tax effect (5) TaxC to effectCCC rated 62(5) Total hedging reserve as at 31 December 34 TotalUnrated hedging reserve as at 31 December 5 3413 Total** 619 354 * Credit ratings as at 18 January 2021 and 11 January 2020, respectively. At 31 December 2020, non-current restricted cash consisted of US$42 million (31 December 2019: US$35 million) held in a debt service reserve account as required by the Project Finance Facility Agreement (Note 17), US$2 million held in bank accounts as security deposits for third parties (31 December 2019: US$2 million) and US$1 million held in deposit against possible environmental obligations in compliance with the statutory rules of several countries in CIS and Europe (31 December 2019: US$ 0.4 million). At 31 December 2020, current restricted cash consisted of US$27 million received under targeted loan agreement with Far East and Arctic Development Fund (31 December 2019: nil) and of US$1 million held at banks under regulatory requirements for state contracts (31 December 2019: US$3 million). There was no current restricted cash received under targeted loan agreements with a state industrial development fund (31 December 2019: US$1 million).

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15 EQUITY 1916 BANKDERIVATIVE BORROWINGS FINANCIAL AND ASSETS OTHER AND LOANS LIABILITIES RECEIVED / CONTINUED / CONTINUED Share capital. As at 31 December 2020 and 31 December 2019, the nominal registered amount of the Company’s issued share capital According to IFRS 7, Financial Instruments: Disclosures, an entity shall disclose the fair value of financial31 December liabilities. 2019 The fair value of in Swiss francs (“CHF”) was CHF 100 thousand (US$111 thousand). The total authorised number of ordinary shares is 1,000 shares with short-term bank borrowings and borrowings bearing floating interest rates is not materially differentDerivative fromassets their carryingDerivative amoun ts.liabilities a par value of CHF 100 (US$111) per share. All authorised shares were issued and fully paid in 2014. (million US$) (million US$) 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED The19 fair DERIVATIVE value of the long-term FINANCIAL borrowings bearing ASSETS a fixed AND interest LIABILITIES rate is estimated / basedCONTINUED on expected cash flows discounted at a Operating activities Treasury shares. In 2019, MCC EuroChem JSC, a Group’s wholly-owned subsidiary, bought from a company31 December that holds2019 business prevailing market interest rate. As at 31 December 2020, the total fair value of long-term loans with31 fixed December interest 2019 rates was more than interests for former executive of the Group 100 ordinary shares of EuroChem Group AG, representingDerivative 10% assets of the issued shareDerivative capital, liabilities theirCommodity carrying swaps amount and by collars US$23 million (31 December 2019: the fair value of long-term loansDerivative was more assets than their carryingDerivative amount liabilities by for US$785 million paid in cash. (million US$) (million US$) 2020US$22 million). (million US$)– (million US$)2 Operating activities Operating activities The voting rights in the Company’s 100 ordinary shares owned by MCC EuroChem JSC, as well as the rights associated therewith, are Under the terms of the loan agreements, the Group is required to comply with a number of covenants and restrictions, including the suspended.Commodity swaps and collars maintenanceCommodity swaps of certain and collarsfinancial ratios and financial indebtedness and cross-default provisions. The Group was Derivativein compliance Derivative with 2020 – 2 2020covenants during the reporting period. Currency pair Volume (million– assets (million liabilities2 Dividends. During 2020 and 2019 the Group did not declare or pay dividends. (sell/buy) US$) US$) (million US$) Operating activities Capital contribution. In 2016 and in 2018 the Group received funds of US$250 million and US$600 million, respectively,Derivative in a formDerivative of Interest rates and outstanding amounts of major loans and borrowings Derivative Derivative the perpetual loan under the agreement with AIM Capital S.E. Currency pair Volume (million assets (million liabilities ForeignIn December exchange 2020, non-deliverable the Group signed forward a US$394 contracts, million net committed credit facility bearingCurrency paira floating Volume interest (million rateassets and (million maturing inliabilities (sell/buy) US$) US$) (million US$) December 2020 2024. As at 31 December 2020, the outstanding amount was US$197 millionUSD/RUB(sell/buy) (31 December US$) 1352019: nil). In JanuaryUS$)9 (million 2021, US$)the– HedgingOperating reserve. activities As at 31 December 2020, the hedging reserve represented the cash flow hedge reserve of US$34 million, which is Operatingadditional drawdown activities was made of US$197 million. used to recognise the effective portion of changes in fair value of derivative instruments designated as cash flow hedges net of 2020 BRL/USD 33 – – Foreign exchange non-deliverable forward contracts, net InForeign October exchange 2020, the non-deliverable Group signed forward a US$460 contracts, million netcommitted credit facility with an accordion option to increase the maximum income tax (Note 19). Financing activities 2020 USD/RUB 135 9 – facility2020 amount up to US$1 billion bearing a floating interest rate and maturing in OctoberUSD/RUB 2025. In December 135 2020, the9 facility – Foreign exchange non-deliverable forward contracts, net Other2020 reserves within “Retained earnings and other reserves”. At 31 December 2020BRL/USD and 31 December 2019, 33 other reserves– of the – amount2020 was increased to US$660 million. As at 31 December 2020, the outstandingBRL/USD amount was US$460 33 million – – Company included a cash contribution of US$5 million from AIM Capital S.E., the parent company. (312020 December 2019: nil). USD/EUR 76 – 8 Financing activities 2020Financing activities BRL/USD 32 – 1 In October 2020, the Group signed a committed revolving credit facility with a Russian bank to finance a urea and ammonia project Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net 16 BANK BORROWINGS AND OTHER LOANS RECEIVED under2021 development in Kingisepp. The funds through this bridge loan may be obtainedUSD/EUR in multiple currencies 80 with a credit– limit up to 7 2020 USD/EUR 76 – 8 2020 USD/EUR 76 – 8 Interest rate Interest rate 31 December 31 December RUBCross 40 currency billion available interest rateup to swaps, January net 2022. The loan may be refinanced with a non-recourse Project Finance Facility signed on Currency and rate 2020* 2019* 2020 2019 2020 BRL/USD 32 – 1 302020 December 2020 (Note 17). As at 31 December 2020, the outstanding amount wasUSD/RUBBRL/USD RUB 18,201 million 310 32 (31 December– 2019: nil). 151 Current2021 loans and borrowings USD/EUR 80 – 7 2021 USD/EUR 80 – 7 Short-term unsecured bank loans In2022 April 2020, the Group signed an uncommitted revolving credit facility with a RussianUSD/RUB bank. The funds 292 through this facility 21 may be – Cross currency interest rate swaps, net Cross currency interest rate swaps, net US$ with floating rate 2.72% 3.58% - 6.80% 100 35 obtained2023 in multiple currencies with a credit limit up to RUB 50 billion available up USD/RUBto September 2025. 511As at 31 December 38 2020, the– 2020 USD/RUB 310 – 15 outstanding2020 amount was RUB 9,722 million (31 December 2019: nil). USD/RUB 310 – 15 EUR with floating rate 1.50% – 8 – Total derivative financial assets/liabilities – 68 33 2022 USD/RUB 292 21 – 2022 USD/RUB 292 21 – US$ with fixed rate 2.04% - 5.31% 3.41% - 4.23% 219 478 InThe the impact period of from cash July flow 2019 hedges to October of foreign 2020, currency the Group risk on signed comprehensive four non-revolving income andcredit profit facilities or loss of wasUS$40 as follows:million each, maturing in RUB2023 with fixed rate 1.70% - 5.00%USD/RUB 5.00% 511 79 38 12 – the2023 period from July 2020 to October 2021. As at 31 December 2020, the outstandingUSD/RUB amount was US$80 511 million (3138 December 2019:– Total derivative financial assets/liabilities – 68 33 US$80Total derivative million). financial assets/liabilities 2020 – 68 33 BRL with fixed rate – 7.50% – 9 Gain/(loss) Short-termThe impact unsecured of cash targeted flow hedges loans of foreign currency risk on comprehensive income and profit or loss was as follows: InThe December impact of 2019, cash theflow Group hedges signed of foreign a RUB currency 6 billion risk committed on comprehensive revolvingGain/(loss) credit income facilityreclassified and bearingprofit or a loss fixed was interest as follows: rate and maturing in recognised in from other RUB with fixed rate 5.11% - 5.19% – 246 – May 2021. As at 31 December 2020, the outstanding amount was RUB 4,521 million (31 December 2019: RUB 740 million). 2020 other comprehensive 2020 Line in the consolidated Current portion of unsecured targeted loans Gain/(loss) comprehensive incomeGain/(loss) to profit In September 2019, the Group signed a US$100 million committed reincomevolving credit facilityor loss bearing a floating intereststatement rate ofand profit maturing or loss RUB with fixed rate Gain/(loss) 5.00%reclassified 5.00% 10 3 in September 2021. As at 31 December 2020, the outstanding amountGain/(loss) was US$100reclassified million (31 December 2019: nil). recognised in from other Financing activities recognised in from other Current portion of unsecured long-term bank loans other comprehensive InForeign December exchange 2018, non-deliverable the Group signed forward an uncom contracts,mitted net revolving credit otherfac(5)ility withcomprehensive a Russian44 bank with creditOther limitfinancial increased gain/(loss), to net US$ with floating rate comprehensive1.70% - 2.35%income to profit 3.25% - 3.96% 608Line in the consolidated 498 comprehensive income to profit Line in the consolidated income or loss statement of profit or loss US$300Cross currency million interestin 2019. rate The swaps, funds through net this facility may be obtainedincome in(3) multiple currencies.or loss3 As at 31 DecemberOther financialstatement 2020, gain/(loss), ofthe profit or netloss RUB with fixed rate 5.55% 7.55% - 8.30% – 53 Financing activities outstandingFinancingOperating activitiesactivities amount was US$300 million (31 December 2019: US$150 million). Current portion of secured long-term bank loans Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net InForeign June 2018,exchange the Group non-deliverable signed a US$820 forward million contracts, committed net credit facility(5)(8) bearing a floating448 interest Other operating rateOther and maturingfinancialincome/(expenses), gain/(loss),in July 2021. net BRL with fixed rate 2.94% 2.94% 1 – Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net AsTotalCross at 31 currency December interest 2020, rate the swaps, outstanding net amount was US$442 million (31(16)(3) December 2019:553 US$820 million).Other financial gain/(loss), net Less: short-term portion of transaction costs (4) (2) Operating activities Operating activities Total current loans and borrowings 1,267 1,086 InDuring March the 2018, year the ended Group 31 Decembersigned a US$200 2020, theremillion was committed no material credit hedge facility ineffectiveness. bearing a floating interest rate and maturing in April 2022. Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net AsForeign at 31 Decemberexchange non-deliverable 2020, the outstanding forward amount contracts, was net US$128 million (31(8) December 2019:8 US$200 Other operating million). income/(expenses), net

Total (16) 55 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 Interest rate Interest rate 31 December 31 December In 2017, the Group signed a US$750 million unsecured credit facility bearing a floating interest rate and maturing in September 2022. CurrencyDuring and the rate year ended 31 December 2020, there was no material hedge ineffectiveness.2020* 2019* 2020 2019 AsDuring at 31 the December year ended 2020, 31 Decemberthe outstanding 2020, amount there was was no US$69 material million hedge (31 ineffectiveness.December 2019: US$109 million). 2020 Non-current loans and borrowings As at 1 January – Long-termThe impact unsecured of cash bank flow loanshedges of foreign currency risk on changes in equity was as follows: InEffectiveThe 2014, impact the portion ofGroup cash of signedchangesflow hedges an in uncommitted fair of valueforeign of currencyrevolvingcash flow risk credithedges on facilitychanges with in equitya Russian was bank. as follows: The funds through this facility may be (16) obtained in multiple currencies. As at 31 December 2020, the outstanding amount was US$300 million (31 December 2019: RUB with fixed rate 4.75% - 5.25% – 169 –2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 US$500 million). US$As atwith 1 January floating rate 2.34% – 657 – – TaxAs at effect 1 January (5)– US$Effective with fixed portion rate of changes in fair value of cash flow hedges 3.60% - 4.60% 4.20% - 4.60% 600 650 (16) TotalUndrawnEffective hedging portion facilities reserve of changes as at in31 fair December value of cash flow hedges 34(16) Long-termTransfer unsecured of changes targeted in fair value loans of cash flow hedges to profit or loss 55 AsTransfer at 31 Decemberof changes 2020, in fair the value below of cash facilities flow hedgeshad no outstandingto profit or loss balances and are available to the Group: 55 RUBTax with effect fixed rate 5.00% 3.00% - 5.00% 35 21 (5) Tax• US$125 effect million uncommitted revolving credit facility bearing a floating interest rate, signed in April 2016, maturing in March 2021; (5) Long-termTotal hedging portion ofreserve unsecured as at bank31 December loans 34 Total hedging reserve as at 31 December 34 • US$1 billion revolving credit facility signed in September 2017 and amended in December 2020, available up to November 2026. US$ with floating rate 1.70% - 2.35% 3.25% - 3.96% 123 731 Commitment for the facility may be activated at any time by notice. RUB with fixed rate 5.55% - 10.20% 7.55% - 10.20% 12 11 Long-term portion of secured bank loans Collaterals and pledges BRL with fixed rate 2.94% 2.94% 1 1 As at 31 December 2020, loans of a Brazilian subsidiary totalling US$1 million were collateralised by property, plant and equipment with the carrying value of US$6 million (31 December 2019: loans of US$1 million were collateralised by property, plant and equipment Less: long-term portion of transaction costs (9) (9) with the carrying value of US$7 million). Total non-current loans and borrowings 1,588 1,405 Total loans and borrowings 2,855 2,491 As at 31 December 2020 and 31 December 2019, all other bank borrowings and loans received listed in Note 16 were not secured. * Contractual interest rate on 31 December 2020 and 31 December 2019, respectively.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

17 PROJECT FINANCE 1918 DERIVATIVEBONDS ISSUED FINANCIAL / CONTINUED ASSETS AND LIABILITIES / CONTINUED Due to the non-recourse nature of the Project Finance facilities they are excluded from financial covenant calculations in accordance In April 2019, the Group issued RUB-denominated bonds totalling RUB 19 billion bearing a semi-annual31 December coupon 2019 rate of 8.55% per with the Group’s various debt, project, finance, legal and other documents and are presented as a separate line “Project Finance” in annum maturing in April 2022. Derivative assets Derivative liabilities the consolidated statement of financial position. (million US$) (million US$) 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED 19In the period DERIVATIVE from July to AugustFINANCIAL 2019, the GroupASSETS made threeAND issues LIABILITIES of RUB-denominated / CONTINUED bonds totalling RUB 33 billion bearing a Operating activities Ammonia project in Kingisepp. In 2015, the Group signed a EUR 557 million Non-recourse 13.5-year Project31 December Finance 2019 Facility with a quarter-annual and a semi-annual coupon rate of 7.85% per annum each and maturing in the period31 fromDecember January 2019 to August 2023. floating interest rate based on 3-month Euribor to finance the construction of an Ammonia PlantDerivative in Kingisepp, assets Russia. Derivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities (million US$) (million US$) In April 2020, the Group made two issues of RUB-denominated bonds at a nominal value of RUB(million 10 billion US$) and RUB 25 billion,(million US$) During the year ended 31 December 2020, the Group made a repayment of EUR 58 million (US$66 million) (2019: EUR 32 million 2020bearing semi-annual coupon rates of 8.25% and 8.05% per annum, respectively, and maturing in April 2025.– 2 Operating activities Operating activities (US$36 million)). During the year ended 31 December 2020, the Group did not receive additional funds under the Facility (2019: EUR In May 2020, 8.75% RUB-denominated bonds were redeemed at maturity in full amount of RUB 15 billion or US$209 million. 83 millionCommodity (US$94 swaps million)). and collars Commodity swaps and collars Derivative Derivative 2020 – 2 2020 Currency pair Volume (million– assets (million liabilities2 As at 31 December 2020, the outstanding balance was US$501 million shown net of transaction costs of US$70 million (31 December 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES (sell/buy) US$) US$) (million US$) 2019: US$489 million shown net of transaction costs of US$98 million). The contractual interest rate as at 31 December 2020 was Operating activities Derivative Derivative At 31 December 2020, net derivative financial assets and liabilities were: Derivative Derivative 1.3% p.a. (31 December 2019: 1.3% p.a.). Currency pair Volume (million assets (million liabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million assets (million liabilities (sell/buy) US$) US$) (million US$) (sell/buy) AssetsUS$) US$) (millionLiabilities US$) The fair value of this Facility was not materially different from its carrying amount. 2020 USD/RUBNon- 135 Non-9 – Operating activities Operating activities current Current current Current As at 31 December 2020, in compliance with terms of the facility agreement the Group held US$42 million on a debt service reserve 2020 BRL/USD 33 – – Foreign exchange non-deliverable forward contracts, net CashForeign flow exchange hedges: non-deliverable forward contracts, net account (31 December 2019: US$35 million) (Note 14). Financing activities 2020 USD/RUB 135 9 – RUB/US$2020 non-deliverable forward contracts with a nominal amount of USD/RUB 135 9 – Foreign exchange non-deliverable forward contracts, net As at2020 31 December 2020 and 31 December 2019, under the terms of the facility agreementBRL/USD 100% of the shares 33 in EuroСhem– – RUB2020 64,271 million and BRL/US$ non-deliverable forward contracts with a BRL/USD 33 – – Northwest JSC, the project owner and wholly-owned subsidiary of the Group, were pledged as collateral. The carrying value of the nominal2020 amount of US$19 million USD/EUR– 39 76 – –8 Financing activities Financing activities total assets of the company pledged under the Facility related to the project amounted to US$999 million as at 31 December 2020 (31 2020 BRL/USD 32 – 1 DecemberForeign 2019: exchange US$ 1,197non-deliverable million). forward contracts, net Foreign exchange non-deliverable forward contracts, net Derivative2021 instruments for which hedge accounting was not applied: USD/EUR 80 – 7 2020 USD/EUR 76 – 8 2020 USD/EUR 76 – 8 During the year ended 31 December 2020, the EBITDA of the subsidiary under the Ammonia project was US$66 million (2019: US$54 CrossCommodity currency swaps interest rate swaps, net – – – 12 million).2020 BRL/USD 32 – 1 2020EUR/US$ non-deliverable forward contracts with a nominal amount of EUR 62 USD/RUBBRL/USD 310 32 – 151 2021 USD/EUR 80 – 7 2021 USD/EUR– 80– – 73 Ammonia and urea project in Kingisepp. On 30 December 2020, the Group signed a non-recourse Project Finance Facility with a million2022 USD/RUB 292 21 – RUB/US$ non-deliverable forward contracts with a nominal amount of totalCross maximum currency limit interestof US$608 rate million swaps, and net RUB 78,946 million with the final repayment date in 2031 and an interest rate linked to the Cross2023 currency interest rate swaps, net USD/RUB 511 38 – RUB 29,633 million and US$411 million 3 20 3 13 Central2020 Bank of the Russian Federation key rate to finance the construction of a new AmmoniaUSD/RUB and urea Plant 310 in Kingisepp,– Russia. 15 2020Total derivative financial assets/liabilities USD/RUB 310– 68– 3315 2022 USD/RUB 292 21 – Cross2022 currency interest rate swaps USD/RUB9 292– 101 21 – TotalThe impact of cash flow hedges of foreign currency risk on comprehensive income and profit12 or loss was59 as follows:104 28 18 2023 BONDS ISSUED USD/RUB 511 38 – 2023 USD/RUB 511 38 – Total derivative financial assets/liabilities 31 December 2020 – 31 December 68 2019 33 AtTotal 31 Decemberderivative 2019,financial net assets/liabilitiesderivative financial assets and liabilities were: 2020 – 68 33 Coupon Fair Carrying Fair Carrying Gain/(loss) CurrencyThe impact of cash flow hedges of foreign Ratecurrency riskrate, on p.a. comprehensiveMaturity income valueand profit oramount loss was as follows:value amount The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or lossAssets was as follows: Liabilities recognised in from otherNon- Non- Current bonds 2020 other comprehensivecurrent 2020 Current current Current Line in the consolidated US$ Fixed 3.95% 2021 Gain/(loss)130 128 – – comprehensive incomeGain/(loss) to profit Derivative instruments for which hedge accounting was not applied:income or loss statement of profit or loss US$ Fixed 3.80%Gain/(loss) 2020 reclassified– – 125 124 Gain/(loss) reclassified recognised in from other FinancingCommodity activities swaps and collars recognised in from other– – – 2 RUB Fixed 8.75% 2020other comprehensive– – 245 242 ForeignRUB/US$ exchange non-deliverable non-deliverable forward contractsforward contracts, with a nominal net amount of other(5) comprehensive44 Other financial gain/(loss), net comprehensive income to profit Line in the consolidated comprehensive income to profit Line in the consolidated Total current bonds issued income 130or loss 128 statement 370 of profit 366 or loss RUBCross 9,000 currency million interest rate swaps, net income(3) or loss3– Other9 financialstatement– gain/(loss), of profit or netloss– Financing activities FinancingEUR/US$Operating non-deliverable activitiesactivities forward contracts with a nominal amount of EUR 122 Non-currentForeign exchange bonds non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreignmillion exchange non-deliverable forward contracts, net (5)(8) 448– Other operatingOther– financialincome/(expenses), 7gain/(loss), net8 US$Cross currency interest rate swaps, net Fixed 3.95% 2021(3) – 3 – Other financial 130 gain/(loss), 128 net BRL/US$TotalCross currency non-deliverable interest rate forward swaps, contracts net with a nominal amount of US$65(16)(3) 553 Other financial gain/(loss), net million – – – 1 US$Operating activities Fixed 5.50% 2024 771 700 766 700 Operating activities During the year ended 31 December 2020, there was no material hedge ineffectiveness. 59 – – 15 RUBForeign exchange non-deliverable forwardFixed contracts, net 8.55% 2022(8) 269 8 Other257 operating income/(expenses), 318 307 net CrossForeign currency exchange interest non-deliverable rate swaps forward contracts, net (8) 8 Other operating income/(expenses), net Total 59 9 7 26 RUBTotal Fixed 7.85% 2023(16) 47055 447 546 533 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 RUB Fixed 8.05% 2025 363 338 – – Movements in the carrying amount of derivative financial assets/(liabilities) were: 2020 RUBDuring the year ended 31 December 2020,Fixed there was 8.25%no material hedge 2025 ineffectiveness.135 135 – – During the year ended 31 December 2020, there was no material hedge ineffectiveness. As at 1 January Cash – Less: transaction costs – (8) – (7) The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows:Gain/(loss) from (proceeds)/ (16) Total non-current bonds issued 2,008 1,869 1,760 1,661 1 January changes of fair payments on 31 December 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 2020 value, net derivatives, net 202055 TotalA sbonds at 1 January issued 2,138 1,997 2,130 2,027 – TaxAs at effect 1 January (5)– Operating activities 7 (8) 35 34 US$-denominatedEffective portion bonds of changes and RUB-denominated in fair value of cash bonds flow were hedges liste d on the Irish Stock Exchange and the Moscow Exchange, (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) respectively.Transfer ofThe changes fair value in fair of thevalue bonds of cash was flow determined hedges towith profit reference or loss to their market quotations or executable prices. 55 CommodityTransfer of changes collars in fair value of cash flow hedges to profit or loss (2) 1 1 55– Tax effect (5) TaxCommodity effect swaps – (14) 2 (12)(5) In March 2019, the Group completed a tender offer for its 3.80% US$-denominated loan participation notes and 3.95% US$- Freight swaps – (1) 1 – denominatedTotal hedging guaranteed reserve notes as at with31 December total nomi nal value of US$1 billion, which were partially redeemed at total nominal value of 34 Total hedging reserve as at 31 December 34 9 6 31 46 US$748 million, with a simultaneous new issue of US$-denominated guaranteed notes at a nominal value of US$700 million bearing Foreign exchange non-deliverable forward contracts, net a semi-annual coupon rate of 5.50% per annum to finance the purchase of notes under the tender offer. The new US$700 million Investing activities – (32) 32 – bonds issue matures in March 2024. 3.80% US$ denominated loan participation notes of US$124 million were redeemed at maturity Foreign exchange non-deliverable forward contracts, net – (32) 32 – in full amount in April 2020. Financing activities 28 (145) 22 (95) Foreign exchange non-deliverable forward contracts, net (16) 3 10 (3) Cross currency interest rate swaps, net 44 (148) 12 (92) Total derivative financial assets and liabilities, net 35 (185) 89 (61)

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EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED 31 December 2019 Cash flow hedges of foreign currency risk 31 December 2019 Derivative assets Derivative liabilities The Group is exposed to foreign exchange risk to the extent that its future cash inflows and outflows over a certain period of time are Derivative(million assets US$) Derivative(million liabilities US$) denominated in different currencies. The objective of the Group’s foreign exchange risk management is to minimise the volatility of (million US$) (million US$) 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED Operating19 DERIVATIVE activities FINANCIAL ASSETS AND LIABILITIES / CONTINUED the cash flows arising from exchange rates fluctuations to which it is subject to in the countries it operates. In order to achieve this, Operating activities 31 December 2019 Commodity swaps and collars 31 December 2019 the Group enters into foreign exchange non-deliverable and deliverable forward contracts and swapDerivative agreements. assets (For moreDerivative details liabilities Commodity swaps and collars Derivative assets Derivative liabilities on foreign currency risk management please refer to Note 33). 2020 – 2 (million US$) (million US$) 2020 (million US$)– (million US$)2 Operating activities Operating activities The Group enters into derivative contracts where the critical terms of the hedging instrument match with the terms of the hedged item. The Group performs a qualitative assessment of effectiveness. Where the critical terms of the hedging instrument do not match Derivative Derivative Commodity swaps and collars Commodity swaps and collars Currency pair Volume (million assetsDerivative (million Derivativeliabilities exactly2020 with the terms of the hedged item, the Group uses the hypothetical derivative method to assess hedge– effectiveness. The 2 2020 Currency(sell/buy) pair Volume (millionUS$)– assets (millionUS$) (millionliabilities US$)2 Group identified the following potential sources of hedge ineffectiveness, which are assessed to be not material for the reporting (sell/buy) US$) US$) (million US$) Operating activities period: differences in timing of cash flows of the hedging instrument and the hedged item, counterparty’s credit risk, which affects Operating activities Derivative Derivative Foreign exchange non-deliverable forward contracts, net Derivative Derivative differently the hedging instrument and the hedged item, and forward component of theCurrency hedging pair instrumentVolume (million that assets the borrowing (million liabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million assets (million liabilities designated as the hedged item does not have. (sell/buy) US$) US$) (million US$) 2020 USD/RUB(sell/buy) US$) 135 US$)9 (million US$)– 2020 USD/RUB 135 9 – Operating activities Operating2020 activities BRL/USD 33 – – Cash flow hedges: 2020 BRL/USD 33 – – Foreign exchange non-deliverable forward contracts, net 31 December 2020 ForeignFinancing exchange activities non-deliverable forward contracts, net Financing activities 2020 USD/RUB Derivative 135 Derivative 9 – Foreign2020 exchange non-deliverable forward contracts, net USD/RUB 135 9 – Currency pair Volume assets liabilities Average Foreign exchange non-deliverable forward contracts, net BRL/USD 33 – – 2020 USD/EURBRL/USD 3376 – –8 2020 (sell/buy) (million US$) (million US$) (million US$) forward rate 2020 USD/EUR 76 – 8 2020 BRL/USD 32 – 1 ForeignFinancing exchange activities non-deliverable forward contracts, net 2020Financing activities BRL/USD 32 – 1 2021 USD/EUR 80 – 7 2021Foreign exchange non-deliverable forward contracts, net USD/RUB 800 39 – 79.2237 2021Foreign exchange non-deliverable forward contracts, net USD/EUR 80 – 7 20212020 BRL/USD USD/EUR19 – 76 – – 5.1635 8 2020Cross currency interest rate swaps, net USD/EUR 76 – 8 Cross currency interest rate swaps, net Total derivative financial assets/ liabilities – 39 – – 2020 USD/RUB 310 – 15 2020 BRL/USD 32 – 1 2020 USD/RUBBRL/USD 310 32 – 151 2021 USD/EUR 80 – 7 20212022 USD/RUBUSD/EUR 292 80 21– –7 Derivative instruments for which hedge accounting was not applied: 2022 USD/RUB 292 21 – 2023 USD/RUB 511 38 – Cross currency interest rate swaps, net 31 December 2020 Cross2023 currency interest rate swaps, net USD/RUB 511 38 – 2020 USD/RUBDerivative assets 310 Derivative– liabilities 15 2020Total derivative financial assets/liabilities USD/RUB 310– 68– 3315 (million US$) (million US$) Total derivative financial assets/liabilities – 68 33 2022 USD/RUB 292 21 – The2022 impact of cash flow hedges of foreign currency risk on comprehensive incomeUSD/RUB and profit or loss was 292 as follows: 21 – Operating activities The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: 2023 USD/RUB 511 38 – 2023 USD/RUB 511 38 – 2020 Commodity swaps 2020 Total derivative financial assets/liabilities – 68 33 Total derivative financial assets/liabilities Gain/(loss) – 68 33 2021 – 12 Gain/(loss) reclassifiedGain/(loss) recognisedGain/(loss) in reclassifiedfrom other The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: recognisedother in comprehensivefrom other 2020 Derivative Derivative comprehensiveother incomecomprehensive to profit 2020 Line in the consolidated Line in the consolidated CurrencyGain/(loss) pair Volume assets liabilities comprehensiveincome incomeGain/(loss) toor profit loss statement of profit or loss (sell/buy) (million US$) (million US$) (million US$) income or loss statement of profit or loss Gain/(loss) reclassified Financing activities Gain/(loss) reclassified Operating activities recognised in from other Financing activities recognised in from other Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net comprehensive income to profit Line in the consolidated Cross currency interest rate swaps, net comprehensive(3) income to profit3 Other financialLine in gain/(loss),the consolidated net income or loss statement of profit or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss 2021 USD/RUB 271 17 – Operating activities Financing activities FinancingOperating activitiesactivities 2021 RUB/USD 307 3 13 Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net 2022 USD/RUB 67 – 2 Total (16) 55 Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net 2022 RUB/USD 67 2 – Operating activities DuringOperating the activitiesyear ended 31 December 2020, there was no material hedge ineffectiveness. During the year ended 31 December 2020, there was no material hedge ineffectiveness. 2023Foreign exchange non-deliverable forward contracts, net (8) USD/RUB 8 Other 37operating income/(expenses),– 1 net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: 2023Total (16) RUB/USD55 37 1 – TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 2020 Financing activities 2020 During the year ended 31 December 2020, there was no material hedge ineffectiveness. ADurings at 1 theJanuary year ended 31 December 2020, there was no material hedge ineffectiveness. – Foreign exchange non-deliverable forward contracts, net As at 1 January – Effective portion of changes in fair value of cash flow hedges (16) 2021The impact of cash flow hedges of foreign currency risk on changes in equity wasUSD/EUR as follows: 80 – 3 EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) Transfer of changes in fair value of cash flow hedges to profit or loss 55 Cross currency interest rate swaps, net 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 Tax effect (5) 2022As at 1 January USD/RUB 392 – 34 – TaxAs at effect 1 January (5)– Total hedging reserve as at 31 December 34 2023Effective portion of changes in fair value of cash flow hedges USD/RUB 511 – 64 (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) Transfer of changes in fair value of cash flow hedges to profit or loss 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 2024 USD/RUB 30 – 1 Tax effect (5) Tax effect (5) 2025 USD/RUB 468 9 2 Total hedging reserve as at 31 December 34 Total hedging reserve as at 31 December 34 Total derivative financial assets/liabilities – 32 132

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EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

20 OTHER NON-CURRENT LIABILITIES AND DEFERRED INCOME 1922 DERIVATIVETRADE PAYABLES, FINANCIAL OTHER ASSETS ACCOUNTS AND LIABILITIES PAYABLE AND / CONTINUED ACCRUED EXPENSES 31 December 31 December 31 December 31 December Note 2020 2019 31 December 2019 2020 2019 Derivative assets Derivative liabilities Trade payables 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED(million US$) (million US$) Liability from contingent consideration related to business combination 31 – 173 OperatingTrade payables activities denominated in US$ 203 169 Deferred payable related to mineral rights acquisition 31 December 2019 11 11 Trade payables denominated in EUR 31 December 2019 128 140 Derivative assets Derivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities Provisions for age premium, retirement benefits, pensions and similar obligations 35 28 Trade payables denominated in RUB 19 37 (million US$) (million US$) 2020 (million US$)– (million US$)2 ProvisionOperating for land activities restoration 21 33 41 OperatingTrade payables activities denominated in other currencies 39 18

Deferred income − Investment grants received 1 1 Trade payables denominated in USD with irrevocable documentary letter of credit 7– Commodity swaps and collars Commodity swaps and collars Derivative Derivative Long-term part of lease payables 40 57 Trade payables denominated in EUR with irrevocable documentary letter of creditCurrency pair Volume (million assets (million3– liabilities 2020 – 2 2020 (sell/buy) US$)– US$) (million US$)2 Total other non-current liabilities and deferred income 120 311 Trade payables denominated in RUB with irrevocable documentary letter of credit 128 144 Operating activities Derivative Derivative Total trade payables Derivative527 Derivative 508 21 PROVISION FOR LAND RESTORATION Currency pair Volume (million assets (million liabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million assets (million liabilities (sell/buy) US$) US$) (million US$) (sell/buy) US$) US$) (million US$) In accordance with federal, state and local environmental regulations the Group’s mining, drilling and processing activities result in Other2020 accounts payable and accrued expenses USD/RUB 135 9 – assetOperating retirement activities obligations to restore the disturbed land in regions in which the Group operates. AdvancesOperating2020 receivedactivities BRL/USD 33 227– 166– Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net Movements in the amount of provision for land restoration were as follows: PayrollFinancing and activities social tax 14 15 USD/RUB 135 9 – USD/RUB 135 9 – 2020 ForeignAccrued2020 exchange liabilities andnon-deliverable other creditors forward contracts, net 205 235 Note 2020 2019 2020 BRL/USD 33 – – Interest2020 payable BRL/USD 33 47– 42– As at 1 January 41 18 2020 USD/EUR 76 – 8 Financing activities Short-termFinancing activitiespart of lease payables 9 10 Change in estimates 8 (4) 19 2020 BRL/USD 32 – 1 Foreign exchange non-deliverable forward contracts, net ForeignShort-term exchange part of deferrednon-deliverable payable forward related contracts,to mineral net rights acquisition 12 Unwinding of the present value discount 28 2 2 2021 USD/EUR 80 – 7 2020 USD/EUR 76 – 8 2020Short-term part of deferred payables related to acquisition of additional interest in USD/EURsubsidiary 76 –2– 8 Currency translation difference (6) 2 Cross currency interest rate swaps, net Total other payables 503 472 Total2020 provision for land restoration as at 31 December BRL/USD 32 33 – 41 1 2020 USD/RUBBRL/USD 310 32 – 151 Total trade payables, other accounts payable and accrued expenses 1,030 980 2021 USD/EUR 80 – 7 2021 USD/RUBUSD/EUR 292 80 21– –7 During 2020 and 2019 the Group reassessed estimates of provision for land restoration due to changes in inflation, discount rates 2022 Cross currency interest rate swaps, net CrossAs at 31 currency December interest 2020, rate trade swaps, payables net included payables to suppliers of property, plant and equipment and construction and expected timing for land restoration. Therefore, the amount of provision for land restoration was recalculated and the appropriate 2023 USD/RUB 511 38 – companies of US$142 million (31 December 2019: US$173 million). Trade payables included payables with irrevocable documentary changes2020 were disclosed as a change in estimates. USD/RUB 310 – 15 2020Total derivative financial assets/liabilities USD/RUB 310– 68– 3315 letters of credit with a deferred term of payment opened in the amount of US$61 million (31 December 2019: US$86 million) under the 2022 USD/RUB 292 21 – 2022 USD/RUB 292 21 – The principal assumptions used for the calculation of land restoration provision were as follows: contractsThe impact with of cashconstruction flow hedges companies, of foreign of US$70 currency million risk onunder comprehensive the contracts income with suppliers and profit of orproperty, loss was plant as follows: and equipment 2023 USD/RUB 511 38 – (312023 December 2019: US$50 million) and of US$7 million under operating activities contractsUSD/RUB (31 December 511 2019: US$8 38 million). – Total derivative financial assets/liabilities 31 December– 2020 31 December 68 2019 33 Total derivative financial assets/liabilities 2020 – 68 33 Discount rates 5.27% - 6.96% 6.19% - 6.60% Gain/(loss) The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: 23The impact SALES of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: Expected inflation rates in Russia 4.00% - 5.00% 3.00% - 4.00% recognised in from other 2020 2019 Expected timing for land restoration 20202025 - 2083 2025 - 2070 other comprehensive 2020 Sales volume SalesLine volume in the consolidated Gain/(loss) comprehensive incomeGain/(loss) to profit income (thousandor loss Sales statement(thousand of profit orSales loss The present value of expected costs to be incurred for the settlementGain/(loss) of land restoration reclassified obligations was as follows: Gain/(loss) metricreclassified tonnes) (million US$) metric tonnes) (million US$) recognised in from other Financing activities recognised in from other 31 December Nitrogen products 8,949 1,923 8,652 2,071 other comprehensive 31 December Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net comprehensive income to profit 2020Line in the consolidated2019 Nitrogen fertilizers comprehensive income to 8,912profit 1,913 Line 8,637 in the consolidated 2,068 income or loss statement of profit or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss Between 1 and 5 years 1 – Other products 37 10 15 3 Financing activities FinancingOperating activitiesactivities Between 6 and 10 years – 1 Phosphate products and complex fertilizers 6,774 2,352 6,228 2,461 Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net Between 11 and 20 years 8 9 Phosphate fertilizers 2,681 933 2,542 1,021 Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net More than 20 years 24 31 Complex fertilizers 3,705 1,246 3,297 1,268 Operating activities Operating activities Total provision for land restoration 33 41 FeedDuring phosphates the year ended 31 December 2020, there was no material hedge ineffectiveness.388 173 389 172 Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Potash fertilizers 2,191 603 1,104 423 Total (16) 55 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 Mining products 5,737 666 5,622 488 During the year ended 31 December 2020, there was no material hedge ineffectiveness. IronDuring ore the concentrate year ended 31 December 2020, there was no material hedge ineffectiveness.5,730 647 5,4862020 442 As at 1 January – Other products 7 19 136 46 The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) Industrial products 1,975 532 2,018 620 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 Other sales – 90 – 121 As at 1 January – TaxAs at effect 1 January (5)– Logistic services – 24 – 38 Effective portion of changes in fair value of cash flow hedges (16) Effective portion of changes in fair value of cash flow hedges (16) TotalOther hedgingproducts reserve as at 31 December – 14 – 3416 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Other services – 52 – 67 Tax effect (5) Tax effect (5) Total sales 6,166 6,184 Total hedging reserve as at 31 December 34 Total hedging reserve as at 31 December 34 The sales of fertilizers, mining and industrial products for the year ended 31 December 2020 included US$412 million of revenues from delivery of these products to customers (2019: US$367 million).

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

24 COST OF SALES 1927 DERIVATIVEOTHER OPERATING FINANCIAL INCOME ASSETS AND AND EXPENSES LIABILITIES / CONTINUED 2020 2019 2020 2019 31 December 2019 Raw materials 1,009 1,164 Sponsorship Derivative assets Derivative5 liabilities11 Goods19 for resale DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED 1,280 1,446 19(Gain)/loss DERIVATIVE on disposal of property,FINANCIAL plant and ASSETS equipment ANDand intangible LIABILITIES assets, net / CONTINUED(million US$) 34(million US$) Operating activities Other materials 31 December 2019202 217 Foreign exchange (gain)/loss from operating activities, net 31 December 2019 (86) 56 Energy Derivative assets 189 Derivative 199liabilities CommodityImpairment /(reversalswaps and of collars impairment)/write-off of idle property, plant and equipment, net Derivative assets Derivative66 liabilities Utilities and fuel (million US$) 74 (million 88 US$) 2020(Gain)/loss on sales and purchases of foreign currencies, net (million US$)– (5) (million US$)–2 Operating activities Operating activities Labour, including contributions to social funds 265 269 Non-recurring (income)/expenses, net* (11) (38) DepreciationCommodity and swaps amortisation and collars 365 324 CommodityCOVID-19 associated swaps and expenses collars Derivative19 Derivative– 59 57 Currency pair Volume (million assets (million(2) liabilities3 Repairs2020 and maintenance – 2 2020 Other operating (income)/expenses, net (sell/buy) US$)– US$) (million US$)2 Production overheads 71 78 Total other operating (income)/expenses, net (71) 42 Operating activities Property tax, rent payments for land and related taxes Derivative26 Derivative 27 * The amount for the year ended 31 December 2020 included an income of US$14 million from settlement agreements with counterpartiesDerivative under tradingDerivative Currency pair Volume (million assets (million liabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million assets (million liabilities Impairment /(reversal of impairment)/write-off of idle property, plant and equipment, net 3 1 activities of the Group, net of related legal expenses of US$3 million. The amount for the year ended 31 December 2019 included an income of US$74 million (sell/buy) US$) US$) (million US$) 2020 (EUR 67 million) from Engineering, Procurement and Construction (EPC) and Engineering and ProcurementUSD/RUB(sell/buy) (EP) contracts,US$)135 net of payment US$)under9 Bonus(million Deed US$) – ChangesOperating in work activities in progress and finished goods 44 (89) Operatingagreement activities of US$36 million (EUR 33 million). Other costs/(compensations), net 22 29 2020 BRL/USD 33 – – Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net Total cost of sales 3,609 3,810 Financing activities 2020 USD/RUB 135 9 – 282020 OTHER FINANCIAL GAIN AND LOSS USD/RUB 135 9 – Foreign exchange non-deliverable forward contracts, net Note 2020 2019 2020 BRL/USD 33 – – 2020 BRL/USD 33 – – 25 DISTRIBUTION COSTS Changes2020 in fair value of cross currency interest rate swaps USD/EUR 7619 148– (116)8 Financing activities Financing activities 2020 2019 Changes2020 in fair value of foreign exchange deliverable and non-deliverable forwardBRL/USD and 32 – 1 TransportationForeign exchange non-deliverable forward contracts, net 801 703 futures2021Foreign contracts exchange non-deliverable forward contracts, net USD/EUR 8019 29– 27 2020 USD/EUR 76 103 – 94 8 Change2020 in fair value of foreign exchange swap contracts USD/EUR 7619 – (3)8 Labour, including contributions to social funds Cross currency interest rate swaps, net 101 55 Depreciation2020 and amortisation BRL/USD 32 57 – 48 1 2020Reassessment of liability from contingent consideration related to business combinationUSD/RUBBRL/USD 310 32 – 151 7 8 Unwinding of discount on deferred payables 11 Repairs2021 and maintenance USD/EUR 80 – 7 20212022 USD/RUBUSD/EUR 292 80 21– –7 ECL allowance for trade receivables and provision/(reversal of provision) for impairment of other Unwinding of discount on land restoration obligation 21 22 Cross currency interest rate swaps, net Cross2023 currency interest rate swaps, net USD/RUB 511 38 – receivables, net (3) 3 (Gain)/loss on disposal of investment in associates and joint ventures, net –3 2020 USD/RUB 310 – 15 2020Total derivative financial assets/liabilities USD/RUB 310– 68– 3315 Other costs 53 57 5 (2) 2022 USD/RUB 292 21 – Other2022 financial (gain)/loss, net USD/RUB 292 21 – Total distribution costs 1,018 913 TotalThe impact other offinancial cash flow (gain)/loss, hedges of net foreign currency risk on comprehensive income and profit or loss was as follows:286 (58) 2023 USD/RUB 511 38 – 2023 USD/RUB 511 38 – Total derivative financial assets/liabilities – 68 33 Total derivative financial assets/liabilities 2020 – 68 33 26 GENERAL AND ADMINISTRATIVE EXPENSES 29 INCOME TAX Gain/(loss) Gain/(loss) reclassified The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows:2020 2019 The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: 2019 recognised in from other 2020 Labour, including contributions to social funds 2020 156 133 Income tax expense – current other comprehensive 2020 104 167 Line in the consolidated Gain/(loss) comprehensive incomeGain/(loss) to profit Depreciation and amortisation 19 17 Deferred income tax – (origination)/reversal of temporary differences,income net or loss statement(42) of profit or loss 56 Gain/(loss) reclassified Gain/(loss) reclassified Consulting, legal and audit services recognised in from other 32 30 FinancingPrior periods activities adjustments for income tax recognised in from other 4 (1) Bank charges other comprehensive 4 4 ForeignReassessment exchange of deferred non-deliverable tax assets/liabilities forward contracts, due to netchange in the taxother rate(5) comprehensive44 Other financial–1 gain/(loss), net comprehensive income to profit Line in the consolidated comprehensive income to profit Line in the consolidated Social expenditure income or loss statement2 of profit or4 loss IncomeCross currency tax expense interest rate swaps, net income(3) or loss3 Other financialstatement66 gain/(loss), of profit or 223 netloss Repairs and maintenance 2 2 Financing activities AFinancingOperating reconciliation activitiesactivities between theoretical income tax charge calculated at the applicable tax rates enacted in the countries where Group ECL allowance for trade receivables and provision/(reversal of provision) for impairment of other Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net companiesForeign exchange are incorporated, non-deliverable and actual forward income contracts, tax expense net was as follows:(5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net receivables, net 2 1 Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net 2020 2019 OtherOperating expenses activities 46 51 Operating activities ProfitDuring before the year taxation ended 31 December 2020, there was no material hedge ineffectiveness. 561 1,239 TotalForeign general exchange and administrative non-deliverable expenses forward contracts, net (8) 8 Other operating income/(expenses),263 242 net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net

Total (16) 55 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 The total depreciation and amortisation expenses included in the consolidated statement of profit or loss amounted to US$441 million Theoretical tax charge at statutory rate of subsidiaries (19) (198) (2019: US$389 million). During the year ended 31 December 2020, there was no material hedge ineffectiveness. TaxDuring effect the of year items ended which 31 areDecember not deductible 2020, there or assessable was no material for taxation hedge purposes: ineffectiveness. 2020 The total labour costs (including social expenses) included in the consolidated statement of profit or loss amounted to US$524 million •A sNon-deductible at 1 January expenses (36) (23)– The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: (2019: US$496 million). •Effective (Unrecognised portion of tax changes loss for inthe fair year)/recovery value of cash of flow previously hedges unrecognised tax loss carry forward, net 4 (16)(3) 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 The total statutory pension contributions included in all captions of the consolidated statement of profit or loss amounted to • Adjustment on deferred tax assets/liabilities on prior periods (11) 1 As at 1 January – As at 1 January – US$68 million (2019: US$68 million). Tax• Reassessment effect of deferred tax assets/liabilities due to change in the tax rate – (5)(1) Effective portion of changes in fair value of cash flow hedges (16) Effective portion of changes in fair value of cash flow hedges (16) TotalPrior periodshedging adjustments reserve as atrecognised 31 December in the current period for income tax (4) 341 TheTransfer fees for theof changes audit of inthe fair consolidated value of cash and flow statutory hedges financial to profit statements or loss for the year ended 31 December 2020 amounted to 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Income tax expense (66) (223) US$3Tax million effect (2019: US$3 million). The auditors also provided the Group with other non-audit services amounting to US$1 million (5) Tax effect (5) (2019: US$1 million). Total hedging reserve as at 31 December 34 TotalThe Group hedging companies reserve areas atsubject 31 December to tax rate s depending on the country of domicile. 34 Subsidiaries located in Russia applied a tax rate of 20.0% on taxable profits during the year ended 31 December 2020 (2019: 20.0%). Several subsidiaries applied reduced income tax rates within a range from 16.5% to 19.0% according to regional tax law and agreements with regional authorities (2019: within a range from 16.5% to 19.8%). Under the terms of a special investment contract, in respect of its ammonia project, EuroСhem Northwest JSC recognised a deferred tax asset from tax losses carried forward for the year ended 31 December 2020 at the reduced income tax rate of 5% (2019: the reduced income tax rate of 5% on taxable profits). A loss before taxation occurred due to foreign exchange loss on EUR-denominated Project Finance Facility (Note 17).

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

29 INCOME TAX / CONTINUED 1930 EARNINGSDERIVATIVE PER FINANCIAL SHARE ASSETS AND LIABILITIES / CONTINUED Under the terms of the signed special investment contracts, in respect of their potash projects, EuroChem-Usolsky potash Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company31 December by 2019 the weighted average complex LLC and EuroChem-VolgaKaliy LLC may apply the reduced income tax rates of 0% and 5%, respectively. EuroChem-Usolsky number of ordinary shares in issue during the period, excluding treasury shares (Note 15). TheDerivative Company assets has no dilutiveDerivative potential liabilities potash complex LLC applied the reduced income tax rate of 0% for the year ended 31 December 2020. EuroChem-VolgaKaliy LLC ordinary shares and, therefore, the diluted earnings per share equal the basic earnings per share.(million US$) (million US$) did not19 apply DERIVATIVE the reduced income FINANCIAL tax rate of 5% ASSETS for the year ANDended 31LIABILITIES December 2020 / asCONTINUED the subsidiary did not generate revenue 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED Operating activities 2020 2019 from its primary activity that is one of conditions of the special investment contract. The management expects31 December to use 2019 the reduced 31 December 2019 Derivative assets Derivative liabilities Commodity swaps and collars Derivative assets 494Derivative liabilities 1,015 income tax rate in future periods. Profit for the period attributable to owners of the parent (million US$) (million US$) 2020Weighted average number of ordinary shares outstanding (million US$)– 900(million 960US$)2 SubsidiariesOperating located activities in Europe, North and Latin Americas and Asia are subject to the income tax rates ranging from 9.0% to 34.0% Operating activities Earnings per share – basic and diluted 0.55 1.06 (2019:Commodity 9.0% to 34.0%). swaps and collars Commodity swaps and collars Derivative Derivative Currency pair Volume (million assets (million liabilities At 312020 December 2020, the Group had US$170 million (31 December 2019: US$200 million) of unused accumulated– tax losses carried 2 2020 31 BALANCES AND TRANSACTIONS WITH RELATED PARTIES(sell/buy) US$)– US$) (million US$)2 forward in respect of which deferred tax asset of US$33 million (31 December 2019: US$37 million) had not been recognised as it is OperatingThe Group’s activities related parties are considered to include the ultimate beneficiaries, affiliates and entities under common ownership and not probable that future taxable profit will be available against which the Group can utilise such benefits. These tax Derivativelosses c arriedDerivative control within the Group and/or entities having common principal ultimate beneficiaries. The relationships with thoseDerivative related partiesDerivative Foreign exchange non-deliverable forward contracts, net forward expire as follows: Currency pair Volume (million assets (million liabilities with whom the Group entered into significant transactions or had significant balancesCurrency outstanding pair Volume are (million detailed assets below: (million liabilities (sell/buy) US$) US$) (million US$) 2020 USD/RUB(sell/buy) US$) 135 US$)9 (million US$)– 31 December 31 December 31 December 31 December Operating activities 2020 2019 Operating activities Financial2020 statements caption Nature ofBRL/USD relationship 33 2020– 2019– Tax Foreignlosses carry exchange forwards non-deliverable expiring by: forward contracts, net Foreign exchange non-deliverable forward contracts, net ConsolidatedFinancing activities statement of financial position • 312020 December 2020 USD/RUB 135 – 9 2 – 2020 USD/RUB 135 9 – AForeignssets exchange non-deliverable forward contracts, net • 31 December 2021 BRL/USD 33 36 – 36 – BRL/USD 33 – – 2020 2020Non-current originated loans Joint venturesUSD/EUR 76 –1 81 • 31 December 2022 37 37 Financing activities Current2020Financing originated activities loans Other relatedBRL/USD parties* 32 30– –1 • 31 December 2025 42 42 Foreign exchange non-deliverable forward contracts, net 2021CurrentForeign derivativeexchange financialnon-deliverable assets forward contracts, net Other USD/EURrelated parties* 80 –3 –7 • 31 December 2026 2020 USD/EUR 76 45 – 75 8 Trade2020 receivables Other USD/EURrelated parties* 76 34– 84 • 31 December 2027 Cross currency interest rate swaps, net 10 8 Prepayments, other receivables and other current assets including: 2020 BRL/USD 32 – 1 2020 USD/RUBBRL/USD 310 32 – 151 Tax loss carry forwards 170 200 Receivable for sale of subsidiaries (Note 13) Other related parties* 288 – 2021 USD/EUR 80 – 7 20212022 USD/RUBUSD/EUR 292 80 21– –7 The movements in deferred tax (assets) and liabilities during 2020 and 2019 were as follows: Other receivables Other related parties* – 3 Cross currency interest rate swaps, net Cross2023 currency interest rate swaps, net USD/RUB 511 38 –

2020 DifferencesUSD/RUB 310 Currency – 15 2020Total derivative financial assets/liabilities USD/RUB 310– 68– 3315 Liabilities 2022 1 January recognitionUSD/RUB Disposal of 292 translation 2131 December – 2022 USD/RUB 292 21 – 2020 and reversals subsidiaries difference 2020 Non-currentThe impact of derivative cash flow financial hedges liabilitiesof foreign currency risk on comprehensive incomeOther related and profit parties* or loss was as follows: 3 – 2023 USD/RUB 511 38 – 2023 USD/RUB 511 38 – Tax effects of (deductible)/taxable temporary differences Non-current bonds issued Parent company 4 4 Property,Total derivativeplant and equipment financial assets/liabilities and Intangible assets 418 29 (8) – (53) 68386 33 Total derivative financial assets/liabilities 2020 – 68 33 Non-current bonds issued Other Gain/(loss)related parties* 32 24 AccountsThe impact receivable of cash flow hedges of foreign currency risk on comprehensive(6) income and10 profit or loss– was as follows:(1) 3 CurrentThe impact bonds of cash issued flow hedges of foreign currency risk on comprehensiveGain/(loss) incomeOtherreclassified related and profit parties* or loss was as follows: 2 25 Accounts payable (11) (1) – 4 (8) recognised in from other 2020 Current derivative financial liabilities other Othercomprehensive related parties* 2020 10 – Line in the consolidated Inventories (24) Gain/(loss)(6) – 3 (27) Liability from contingent consideration related to business combinationcomprehensive incomeGain/(loss) to profit income or loss statement of profit or loss Other Gain/(loss)(9) reclassified(10) 3 3 (13) (Note 20) Gain/(loss) Otherreclassified related parties* – 173 recognised in from other Financing activities recognised in from other Tax losses carried forward (194) (55) – 15 (234) Trade payables Joint ventures 3 6 other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net Less: Unrecognised deferred tax assets comprehensive37 income to(4) profit – Line– in the consolidated33 Trade payables comprehensive Otherincome related to profit parties* Line in12 the consolidated1 income or loss statement of profit or loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss Net deferred tax (asset)/liability 211 (37) (5) (29) 140 Other accounts payable and accrued expenses including: Financing activities FinancingOperating activitiesactivities Recognised deferred tax assets (76) (56) (1) 10 (123) Interest payable Other related parties* 1 1 Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net Recognised deferred tax liabilities 287 19 (4) (39) 263 Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net Net deferred tax (asset)/liability 211 (37) (5) (29) 140 Operating activities ConsolidatedOperating activities statement of profit or loss During the year ended 31 December 2020, there was no material hedge ineffectiveness. Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net SalesForeign exchange non-deliverable forward contracts, net (8) Associates 8 Other operating income/(expenses),–1 net Reassessment Sales Joint ventures –7 Total (16) 55of deferred tax TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 Differences assets/liabilities Currency Sales Other related parties* 79 33 2020 During the year ended 31 December 2020, there was no material1 hedgeJanuary ineffectiveness.recognition due to change in translation 31 December CostDuring of thesales year ended 31 December 2020, there was no material hedge ineffectiveness.Other related parties* (4) – 2019 and reversals the tax rate difference 2019 As at 1 January – Distribution costs Other related parties* (76) (37) Tax Theeffects impact of (deductible)/taxable of cash flow hedges temporaryof foreign currency differences risk on changes in equity was as follows: EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) Other operating income/(expenses), net Other related parties* (6) – Property, plant and equipment and Intangible assets 339 49 – 30 4182020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 Interest expense Other related parties* (2) (1) AccountsAs at 1receivable January (8) 2 – – (6) – TaxAs at effect 1 January (5)– Gain/(loss) from sale of subsidiaries, net Other related parties* 189 – AccountsEffective payable portion of changes in fair value of cash flow hedges 2 (13) – – (11) (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) Other financial gain/(loss), net Other related parties* (101) (48) InventoriesTransfer of changes in fair value of cash flow hedges to profit or loss (33) 9 – – (24) 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55

OtherTax effect (4) (6) 2 (1) (9) (5) Tax effect (5) Tax Totallosses hedging carried forwardreserve as at 31 December (199) 12 (1) (6) (194) 34 Total hedging reserve as at 31 December 34 Less: Unrecognised deferred tax assets 34 3 – – 37 Net deferred tax (asset)/liability 131 56 1 23 211 Recognised deferred tax assets (82) 6 – – (76) Recognised deferred tax liabilities 213 50 1 23 287 Net deferred tax (asset)/liability 131 56 1 23 211 The Group recognised US$5 million of deferred tax expense in other comprehensive income/(loss) for 2020 (2019: the total amount of the deferred tax charge was recognised in profit and loss).

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are presented in millions of US dollars, unless otherwise stated)

31 BALANCES AND TRANSACTIONS WITH RELATED PARTIES / CONTINUED 1932 DERIVATIVECONTINGENCIES, FINANCIAL COMMITMENTS ASSETS AND AND LIABILITIES OPERATING / CONTINUED RISKS 31 December 31 December i Capital expenditure commitments Financial statements caption Nature of relationship 2020 2019 31 December 2019 As at 31 December 2020, the Group had contractual commitments for capital expenditures ofDerivative US$1,375 assets million (31 DecemberDerivative 2019: liabilities Consolidated statement of cash flows US$400 million), including amounts denominated in EUR of US$961 million and in RUB of US$220(million million, US$) which will represent(million cash US$) 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIESOther / CONTINUED related parties* 3 – 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED Cash proceeds/(payments) on operating derivatives, net outflowsOperating in activitiesthe next 5 years according to the contractual terms. (Increase)/decrease in trade receivables Other related parties*31 December 2019(31) (2) 31 December 2019 Derivative assets Derivative liabilities Commodity swaps and collars Derivative assets Derivative liabilities Increase/(decrease) in trade payables Other related parties* 9 (2) US$953 million of the total amount relate to the development of the ammonia and urea project in Kingisepp (31 December 2019: US$ (million US$) (million US$) 20201 million). (million US$)– (million US$)2 Increase/(decrease)Operating activities in advances from customers Other related parties* – (1) Operating activities

Capital expenditure on property, plant and equipment and other intangible assets Joint ventures (7) (9) Commodity swaps and collars Commodityii Tax legislation swaps and collars Derivative Derivative Liability from contingent consideration related to business combination, paid Other related parties* (241) – Management of the Group believes that its interpretation of the tax legislation is appropriate and the Group’s tax position will be 2020 – 2 2020 Currency pair Volume (million– assets (million liabilities2 Originated loans Parent company (70) – sustained. (sell/buy) US$) US$) (million US$) Operating activities Originated loans Other related parties* Derivative(82) Derivative – Given the scale and international nature of the Group’s business, intragroup transfer pricing and issues such asDerivative controlled forDerivativeeign Repayment of originated loans ParentCurrency company pair Volume (million assets (million70 liabilities – corporations’Foreign exchange legislation, non-deliverable beneficial forwardownership, contracts, permanent net establishment and tax Currencyresidence pair issues,Volume are (million inherent assets tax (million risks just asliabilities they (sell/buy) US$) US$) (million US$) (sell/buy) US$) US$) (million US$) Repayment of originated loans Other related parties* 50 – are2020 for other international businesses. Changes in tax laws or their application withUSD/RUB respect to tax matters 135 in the countries9 where the– OtherOperating investing activities activities Joint ventures – 2 GroupOperating2020 has subsidiariesactivities could increase the Group’s effective tax rate. BRL/USD 33 – – Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net Other investing activities Other related parties* 3 40 TheFinancing majority activities of the Group’s production subsidiaries are located in Russia and are required to comply with Russian tax, currency and Repayment2020 of bonds issued ParentUSD/RUB company 135 – 9 (29) – customs2020 legislation. The Russian tax authorities may be taking a more assertive positionUSD/RUB in their interpretation 135 of the legisla9 tion and – Foreign exchange non-deliverable forward contracts, net BRL/USD 33 – – assessments than the Management of the Group, and it is possible that transactionsBRL/USD and activities that have 33 not been challenged– in – Repayment2020 of bonds issued Other related parties* (22) – 2020 USD/EUR 76 – 8 the past may be challenged. Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years InterestFinancing paid activities Other related parties* (3) (1) Financing activities preceding2020 the year of review with possible extension of this period under certain circumstances.BRL/USD 32 – 1 Purchase of treasury shares (Note 15) Other related parties* – (785) Foreign exchange non-deliverable forward contracts, net 2021Foreign exchange non-deliverable forward contracts, net USD/EUR 80 – 7 * Other2020 related parties are represented by the companies under common control with the Group and/orUSD/EUR by the company ultimately 76 controlled by one– of the 8 Where2020 management believes that it is probable that certain tax positions taken by USD/EURthe Group may not be 76 sustained if challenged– by 8 Group’s shareholders or key management personnel. theCross tax currency authorities, interest the Group rate swaps, recognises net provisions for related taxes, interest and penalties. There were no such provisions recorded 2020 BRL/USD 32 – 1 by2020 the Group at 31 December 2020 and 31 December 2019. USD/RUBBRL/USD 310 32 – 151 In May2021 2020, the Group entered into a share purchase agreement with a related partyUSD/EUR to acquire the remaining 80 50% interest– minus 7 2021 USD/EUR 80 – 7 one share in Fertilizantes Tocantins S.A. The respective liability (Note 3) was reassessed based on a final purchase consideration 2022 USD/RUB 292 21 – Cross currency interest rate swaps, net Crossiii Insurance currency policiesinterest rate swaps, net specified in the agreement. The total consideration denominated in BRL of US$241 million (BRL 1,260 million) was paid in cash in July The2023 Group obtains risk insurance cover as mandated by statutory requirements. TheUSD/RUB Group also holds 511voluntary insurance 38 policies – USD/RUB 310 – 15 USD/RUB 310 – 15 2020.2020 The put and call options for the purchase of 50% interest minus one share, which the Group entered into in 2016, ceased on 2020Totalcovering derivative directors’ financial and officers’ assets/liabilities liability (D&O insurance), physical property damage and business interruption– insurance 68 at major 33 the 2022completion of the transaction. As a result of the transaction, the Group recognisedUSD/RUB a loss of US$101 million. 292 The acquisition 21 allows – 2022production plants, as well as insurance policies related to trade operations, includingUSD/RUB export shipments, 292 and credit insurance 21 of – The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: EuroChem2023 Group to continue an active development of distribution chain in Brazil. USD/RUB 511 38 – 2023certain trade debtors. USD/RUB 511 38 – 2020 ManagementTotal derivative compensation. financial assets/liabilitiesThe total key management personnel compensation amounted to US$16 million– and US$13 68 million for 33 TotalThe Group derivative also carries financial voluntary assets/liabilities life and accident insurance for employees. – 68 33 the years ended 31 December 2020 and 31 December 2019, respectively. This compensation of members of the Management Board Gain/(loss) The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: for their services in full time positions is made up of an annual fixed remuneration plus a performance bonus accrual. The Group insures the risks of physical property damage and busirecognisedness interruption in from in the other production of ammonia in Kingisepp under 2020 the terms of the facility agreement and in compliance with the requirementsother ofcomprehensive lenders. 2020 Sale of subsidiaries. In December 2020, the Group sold two port terminals in Murmansk and Tuapse to the related parties for a total Line in the consolidated Gain/(loss) comprehensive incomeGain/(loss) to profit income or loss statement of profit or loss consideration of US$283 million denominated in Russian rubles (RUB Gain/(loss)21,309 million) toreclassified be paid in six months period. iv Environmental matters Gain/(loss) reclassified recognised in from other TheFinancing Group’s activities plants and operations are subject to numerous national, recognised state in and localfrom environmental other laws and regulations. The Group’s At the date of disposal, the assets and liabilities of the subsidiaries were: other comprehensive Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net comprehensive income to profit Line in the consolidated management regularly evaluates its obligations under these lawscomprehensive and regulations income and to establishesprofit provisions for respectiveLine in the consolidated future income or loss statement1 ofDecember profit or loss environmentalCross currency costs interest in accordance rate swaps, withnet the Group’s accounting policiesincome provided(3) for orin lossthese3 consolidatedOther financial financialstatement statements. gain/(loss), of profit or netloss 2020 Financing activities FinancingOperating activitiesactivities Cash and cash equivalents 10 The environmental laws and regulations are essentially complex and tend to change over time. The scope, extent and speed of this Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net changeForeign mayexchange vary substantially non-deliverable in different forward jurisdictions. contracts, net Accordingly, the Group’s(5)(8) management448 Other system operating providesOther financialincome/(expenses), for ongoing gain/(loss), net Cash pool receivables 2 Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net monitoringTotalCross currency of the interest key trends rate swaps,in applicable net environmental laws and regulations.(16)(3) Though it55 is3 inherently difficultOther financialto estimate gain/(loss), precisely net all Trade and other receivables 11 Operating activities costsOperating associated activities with current and newly proposed environmental requirements, based on information currently available, the Group’s Inventories 2 During the year ended 31 December 2020, there was no material hedge ineffectiveness. Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net managementForeign exchange does non-deliverablenot expect these forward costs to contracts, have a material net effect on the(8) Group’s financial8 position Other operating or liquidity. income/(expenses), net Originated loans 2 Total (16) 55 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 Property, plant and equipment 81 v Legal proceedings GoodwillDuring the year ended 31 December 2020, there was no material hedge ineffectiveness. 2 During the yearreporting ended period, 31 December the Group 2020, was thereinvolved was in no a numbermaterial ofhedge court ineffectiveness. proceedings (both as a plaintiff and a defendant) arising2020 in theAs atordinary 1 January course of business. In the opinion of management, there are no current legal proceedings or other claims outstanding – Trade and other payables (4) The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: whichEffectiveThe impact could portion of have cash of a changesflowmaterial hedges effectin fair of onvalueforeign the of results currencycash flowof operationsrisk hedges on changes or the in financial equity wasposition as follows: of the Group. (16) Income tax payable (1) 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 Deferred tax liabilities (4) vi Operating environment of the Group As at 1 January – TaxAs at effect 1 January (5)– Other non-current liabilities and deferred credits (13) The Group operates in the fertilizer industry with production assets in Russia, Lithuania, Belgium, Kazakhstan and sales networks in Effective portion of changes in fair value of cash flow hedges (16) TotalEffectiveEurope, hedging Russia, portion reserve the of changesCIS, as North at in31 andfair December valueLatin America,of cash flow Central hedges and South-East Asia. The highly competitive nature of the market makes 34(16) Net assets 88 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Transferprices of ofthe changes Group’s in key fair products value of relativelycash flow volatile.hedges to profit or loss 55 Consideration (283) Tax effect (5) Tax effect (5) Currency translation differences reclassified to profit or loss 6 Current and possible future deteriorating economic conditions may have an impact on management’s cash flow forecasts and Total hedging reserve as at 31 December 34 Total hedging reserve as at 31 December 34 Profit on disposal (189) assessment of the impairment of financial and non-financial assets. Debtors of the Group may also become adversely affected by the financial and economic environment, which could in turn impact their ability to repay amounts owed or fulfil obligations undertaken. The Group recognised profit on disposal of US$189 million. Management is unable to predict all developments which could have an impact on the industry and the wider economy and consequently what effect, if any, they could have on the future financial position of the Group. Management believes all necessary measures are being taken to support the sustainability and growth of the Group’s business in the current circumstances.

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32 CONTINGENCIES, COMMITMENTS AND OPERATING RISKS / CONTINUED 1933 DERIVATIVEFINANCIAL AND FINANCIAL CAPITAL ASSETS RISK MANAGEMENT AND LIABILITIES / CONTINUED / CONTINUED Covid-19 situation 33.1 FINANCIAL RISK MANAGEMENT / CONTINUED 31 December 2019 Management closely monitors the situation caused by Covid-19 (coronavirus) and takes necessary measures to ensure continuity of a The table below summarises the Group’s financial assets and liabilities which are subject to Derivativeforeign currency assets risk as atDerivative liabilities business.19 The DERIVATIVE Group has not experiencedFINANCIAL significant ASSETS shutdowns AND in operations LIABILITIES or disruptions / CONTINUED to supply chains due to coronavirus, 1931 December DERIVATIVE 2020: FINANCIAL ASSETS AND LIABILITIES / CONTINUED(million US$) (million US$) except for some delays in materials delivery from contractors. The Group's primary focus is to safeguard its employees, customers Operating activities 31 December 2019 31 December 2019 Other foreign and communities it serves. The Group incurred expenses mainly connected with personal protectiveDerivative equipment assets for on-siteDerivative staff liabilities CommodityFunctional currency swaps and collars RUBDerivative assetsUS$ BRLDerivativecurrencies liabilities responsible for maintaining business processes and personnel costs on implementation and support of an action programme to (million US$) (million US$) 2020 (million US$)– Other(million foreign US$)2 reduce Covid-19 exposure. These expenses were reported within other operating (income)/expenses as "COVID-19 associated Foreign currency US$ RUB US$ currencies Operating activities Operating activities expenses” (Note 27). The Group follows official advice in all markets, where it operates, and continues to focus on managing ASSETS operationsCommodity in a fast-movingswaps and collarsenvironment. CommodityNon-current swaps financial and assets: collars Derivative Derivative Currency pair Volume (million assets (million liabilities 2020 – 2 2020 Restricted cash (sell/buy)– US$)– US$)– (million US$)432 33 FINANCIAL AND CAPITAL RISK MANAGEMENT OperatingUS$/RUB cross activities currency swaps (gross amount) – 1,523 – – Derivative Derivative Derivative Derivative 33.1 FINANCIAL RISK MANAGEMENT Currency pair Volume (million assets (million liabilities ForeignRUB/US$ exchange non-deliverable non-deliverable forward contractsforward contracts, net Currency pair– Volume (million3 assets (million– liabilities– The Group’s activities expose it to a variety of financial risks: market risk (including foreign(sell/buy) currency risk, interestUS$) rate riskUS$) and (million US$) Total 2020 non-current financial assets USD/RUB(sell/buy)– 1,526US$) 135 US$)–9 (million US$)43– commodity price risk), credit risk and liquidity risk. The overall risk management program seeks to minimise potential adverse effects Operating activities Operating 2020 activities BRL/USD 33 – – on theForeign financial exchange performance non-deliverable of the Group. forward contracts, net ForeignCurrent exchangefinancial assets: non-deliverable forward contracts, net Financing activities USD/RUB 135 9 – Trade receivables USD/RUB– 135– 739 40– (a) 2020 Market risk Foreign2020 exchange non-deliverable forward contracts, net Other receivables – – – 42 (i) Foreign2020 currency risk BRL/USD 33 – – 2020 USD/EURBRL/USD 3376 – –8 US$/RUB2020 cross currency swaps (gross amount) – 104 – – As mentionedFinancing inactivities Note 19, the Group is exposed to foreign exchange risk due to the fact that its cash flows are denominated in Financing activities different currencies. RUB/US$2020 non-deliverable forward contracts - cash flow hedges BRL/USD– 39 32 – –1 Foreign exchange non-deliverable forward contracts, net Foreign exchange non-deliverable forward contracts, net RUB/US$2021 non-deliverable forward contracts USD/EUR– 8020 – –7 The2020 objective of the Group’s foreign exchange risk management is to minimise the volatilityUSD/EUR of the Group’s 76cash flows arising– from 8 2020 USD/EUR 76 – 8 CrossCash and currency cash equivalentsinterest rate swaps, net 283 – – 26 fluctuations2020 in exchange rates versus the US$ (which is viewed by the Group as its baseBRL/USD currency), while simultaneously 32 achievi– ng at 1 2020 BRL/USD 32 – 1 least average annual market exchange rates for the Group’s non-US$ purchases. Management focuses on assessing the Group’s Total2020 current financial assets USD/RUB283 163 310 73– 10815 future2021 cash flows in currencies other than US$ and managing operational currency positionUSD/EUR - the gaps arising 80 between inflows– and 7 Total20212022 financial assets USD/RUBUSD/EUR283 1,689 292 80 73 21– 151–7 outflows.Cross Managementcurrency interest also ratepursues swaps, to avoidnet open transactional currency positions by balancing non-US$ cash assets and liabilities. Cross2023 currency interest rate swaps, net USD/RUB 511 38 – The2020 Group includes a number of subsidiaries with Russian rouble as functional currencyUSD/RUB which ha ve a significant 310 volume of– US$- 15 LIABILITIES2020Total derivative financial assets/liabilities USD/RUB 310– 68– 3315 denominated2022 transactions as well as several subsidiaries with US$ functional currencyUSD/RUB having RUB-denominated 292 transactions. 21 At 31 – Non-current2022 financial liabilities: USD/RUB 292 21 – The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: December2023 2020, if the RUB had appreciated/depreciated against the US$ by 10%, all USD/RUBother things being equal, 511 the after 38tax result for – 2023Bank borrowings and loans received USD/RUB– 51138 38– – the Totalyear and derivative equity wouldfinancial have assets/liabilities been US$116 million lower/higher (2019: US$137 million lower/higher), purely– as a result of 68 foreign 33 ProjectTotal derivative Finance financial assets/liabilities – 2020 – 68– 495 33 exchange gains/losses on translation of US$-denominated assets and liabilities at subsidiaries with RUB as a functional currency and RUB/US$ non-deliverable forward contracts Gain/(loss)– 3 – – RUB-denominatedThe impact of cash assets flow and hedges liabilities of foreign at subsidiaries currency with risk US$ on comprehensive as a functional incomecurrency and and profit with orno loss regard was to as the follows: impact of this The impact of cash flow hedges of foreign currency risk on comprehensiveGain/(loss) incomereclassified and profit or loss was as follows: Deferred payable related to mineral rights acquisition recognised in from other– – – 10 appreciation/depreciation on sales. 2020 other comprehensive 2020 Total non-current financial liabilities – 41 Line in– the consolidated505 Gain/(loss) comprehensive incomeGain/(loss) to profit The Group is disclosing the impact of such a 10% shift in the manner set out above to ease the calculation for the users of these income or loss statement of profit or loss Gain/(loss) reclassified Gain/(loss) reclassified consolidated financial statements of the impact on the after tax profit and equity resulting from subsequent future exchange rate recognised in from other CurrentFinancing liabilities: activities recognised in from other changes; this information is not used by the management for foreign currencyother risk comprehensive management purposes. Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net comprehensive income to profit Line in the consolidated Bank borrowings and loans received comprehensive income to profit– 61 Line219 in the consolidated– The Group believes that it benefits from the strengthening of US$ exchangeincome rate versus theor loss RUB and the EUR, and statementthe other of way profit or loss ProjectCross currency Finance interest rate swaps, net income(3) or loss3– Other– financialstatement– gain/(loss), of profit or netloss76 around.Financing This is activitiesmainly due to the fact that in terms of economic substance, as opposed to purely settlement perspective, the Group’s EUR/US$FinancingOperating non-deliverable activitiesactivities forward contracts – – – 3 revenues are directly or indirectly US$-denominated, whereas a significant portion of its operating and capital costs is denominated in Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net RUB/US$Foreign exchange non-deliverable non-deliverable forward contractsforward contracts, net (5)(8) 448– Other operatingOther13 financialincome/(expenses),– gain/(loss), net– RUB and EUR. Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net TradeTotalCross currencypayables interest rate swaps, net (16)(3) 55371 Other– financial78 gain/(loss), net45 DuringOperating 2020 and activities 2019 the Group entered into foreign exchange non-deliverable and deliverable forward contracts in order to Operating activities InterestDuring the payables year ended 31 December 2020, there was no material hedge ineffectiveness. – – 2 1 achieveForeign lower exchange RUB and non-deliverable EUR exchange forwardrates for contracts, its RUB and net EUR purchases than(8) the average8 annual Other exchange operating rates. income/(expenses), The Group also net DeferredForeign exchange payable related non-deliverable to mineral forward rights acquisition contracts, net (8) 8– Other operating– income/(expenses),– net1 routinely enters into forward and swap agreements aimed at lowering the cost of its debt portfolio in US$ terms. The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: Total (16) 55 Total current financial liabilities (16) 5571 74 299 126 During the year ended 31 December 2020, there was no material hedge ineffectiveness. TotalDuring financial the year liabilities ended 31 December 2020, there was no material hedge ineffectiveness. 71 115 299 2020631 A s at 1 January – The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: EffectiveThe impact portion of cash of changesflow hedges in fair of valueforeign of currencycash flow risk hedges on changes in equity was as follows: (16) 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 As at 1 January – TaxAs at effect 1 January (5)– Effective portion of changes in fair value of cash flow hedges (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) Transfer of changes in fair value of cash flow hedges to profit or loss 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 Tax effect (5) Tax effect (5) Total hedging reserve as at 31 December 34 Total hedging reserve as at 31 December 34

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33 FINANCIAL AND CAPITAL RISK MANAGEMENT / CONTINUED 1933 DERIVATIVEFINANCIAL AND FINANCIAL CAPITAL ASSETS RISK MANAGEMENT AND LIABILITIES / CONTINUED / CONTINUED 33.1 FINANCIAL RISK MANAGEMENT / CONTINUED 33.1 FINANCIAL RISK MANAGEMENT / CONTINUED 31 December 2019 The Group’s financial assets and liabilities subject to foreign currency risk as at 31 December 2019 are presented below: In practice, as noted above, while assessing and managing its exposure to foreign currency Derivativerisk, the assetsGroup’s TreasuryDerivative views mos liabilitiest of the Group’s sales as predominantly US$-denominated, regardless of the settlement currency. The(million Group’s US$) Treasury views all(million US$) 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED Other foreign 19 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES / CONTINUED Operatingcurrencies activitiesother than the US$ as foreign currency risk exposures of the Group, while the US$ is viewed as the Group’s base Functional currency RUB US$31 December 2019BRL currencies 31 December 2019 Derivative assets DerivativeOther foreign liabilities Commodityeconomic currency swaps and against collars which all exposures are measured. Derivative assets Derivative liabilities Foreign currency US$ (millionRUB US$) US$ currencies(million US$) (million US$) (million US$) ASSETS 2020(ii) Interest rate risk – 2 Operating activities Operating activities Non-current financial assets: The Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s Commodity swaps and collars Commodity swaps and collars Restricted cash – – – 36 principal interest rate risk arises from long-term and short-term borrowings. Derivative Derivative – 2 Currency pair Volume (million– assets (million liabilities2 US$/RUB2020 cross currency swaps (gross amount) – 989 – – 2020The Group is exposed to the risk from floating interest rates primary from borrowings(sell/buy) and loans denominatedUS$) in foreignUS$) currenci(milliones. US$) RUB/US$ non-deliverable forward contracts – 9 – – Operating activities Derivative Derivative The Group had US$1,488 million of US$ denominated loans outstanding at 31 December 2020 (31 December 2019:Derivative US$1,264 Derivative million) Total non-current financial assets Currency– pair Volume 998 (million assets (million– liabilities 36 bearingForeign floatingexchange interest non-deliverable rates varying forward from 1-monthcontracts, Libor net +1.55% to 1-month LiborCurrency +2.20%, pair from Volume 3-month (million Libor assets +0.70% (million to 3-monthliabilities (sell/buy) US$) US$) (million US$) Libor 2020 +2.15%, 12-month Libor +1.80% (2019: from 1-month Libor +1.55% to 1-month LiborUSD/RUB(sell/buy) +2.20%, from 3-monthUS$) 135 Libor +1.50%US$)9 to(million 3-mo US$)nth– CurrentOperating financial activities assets: LiborOperating2020 +1.95%, activities from 6-month Libor +2.65% to 6-month Libor +4.00%). BRL/USD 33 – – TradeForeign receivables exchange non-deliverable forward contracts, net – – 94 52 Foreign exchange non-deliverable forward contracts, net TheFinancing Group’s activities profit after tax for the year ended 31 December 2020 and equity would have been US$1 million, or 0.2% lower/higher Other2020 receivables USD/RUB– – 135 – 9 41 – (2019:2020 US$1 million, or 0.1% lower/higher), if the US$ Libor interest rate was 10 bps USD/RUBhigher/lower than its 135 actual level during9 the year. – Foreign exchange non-deliverable forward contracts, net US$/RUB cross currency swaps (gross amount) BRL/USD– 375 33 – – – – BRL/USD 33 – – 2020 During2020 2020 and 2019 the Group did not hedge this exposure using financial instruments.USD/EUR 76 – 8 Cash and cash equivalents 74 – – 28 Financing activities 2020Financing activities BRL/USD 32 – 1 Total current financial assets 74 375 94 121 The Group has a formal policy of determining how much maximum unhedged exposure it should have to interest rate risk on the Foreign exchange non-deliverable forward contracts, net 2021Foreign exchange non-deliverable forward contracts, net USD/EUR 80 – 7 Total financial assets 74 1,373 94 157 basis of the assessment of the likely interest rate changes on the Group’s cash flows. The Group performs periodic analysis of the 2020 USD/EUR 76 – 8 current2020 interest rate environment on the basis of which management makes decisionsUSD/EUR on the appropriate 76 mix of fixed-rate– and 8 Cross currency interest rate swaps, net 2020 BRL/USD 32 – 1 variable-rate2020 debt for both existing and planned new borrowings. BRL/USD 32 – 1 LIABILITIES 2020 USD/RUB 310 – 15 2021 USD/EUR 80 – 7 2021 USD/EUR 80 – 7 Non-current financial liabilities: (iii)2022 Commodity price risk USD/RUB 292 21 – BankCross borrowings currency and interest loans ratereceived swaps, net – – – – Cross2023Commodity currency price interest risk arises rate fromswaps, fluctuations net in prices of the Group's purchases ofUSD/RUB raw materials and sales 511 of products. 38 Primary raw – Project2020 Finance USD/RUB– – 310 – – 522 15 materials2020Total derivative used by financial the Group assets/liabilities in its production processes are natural gas, energy, apatiteUSD/RUB and potash. The 310– Group is mostly 68– self- 3315 sufficient in apatite and potash, having its own reserves supported by worldwide distribution network. Natural gas and energy prices EUR/US$2022 non-deliverable forward contracts USD/RUB– – 292 – 21 7 – 2022 USD/RUB 292 21 – inThe Russia, impact where of cash main flow production hedges of assets foreign are currency located, risk are on subjec comprehensivet to government income regulation, and profit and or areloss generally was as follows: lower than prices 2023 USD/RUB 511 38 – 2023 USD/RUB 511 38 – Deferred payable related to mineral rights acquisition – – – 10 established within the European Union. Commodity price risk on products is managed by forecasting future market demand and TotalTotal non-current derivative financial financial liabilities assets/liabilities – – – – 68 539 33 Total derivative financial assets/liabilities 2020 – 68 33 prices and incorporating risk analysis into decision making. Cost advantages and decreaseGain/(loss) of exposure to commodity price risk are The impact of cash flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: achievedThe impact through of cash operating flow hedges a vertically of foreign integrated currency business risk on comprehensive model.Gain/(loss) incomereclassified and profit or loss was as follows: Current liabilities: recognised in from other 2020 The Group also routinely enters into commodity swaps and collars contractsother aimedcomprehensive to minimise 2020 price fluctuations of products. Bank borrowings and loans received 200 51 306 6 Line in the consolidated Gain/(loss) comprehensive incomeGain/(loss) to profit income or loss statement of profit or loss Bonds issued Gain/(loss) reclassified124 – – – (b) Credit risk Gain/(loss) reclassified Project Finance recognised in from other– – – 65 CreditFinancing risk activitiesarises from the possibility that counterparties to transactions recognised may in defaultfrom on other their obligations, causing financial losses for other comprehensive theForeign Group. exchange Financial non-deliverable assets, which potentiallyforward contracts, subject Groupnet entities toother credit(5) risk,comprehensive consist44 principally of originatedOther financial loans, gain/(loss), trade net EUR/US$ non-deliverable forward contracts comprehensive income to profit– – Line– in the consolidated8 comprehensive income to profit Line in the consolidated receivables, advances to suppliers and contractors, as well as cash and bank deposits. The objective of managing credit risk is to BRL/US$ non-deliverable forward contracts income or– loss – statement1 of profit or– loss Cross currency interest rate swaps, net income(3) or loss3 Other financialstatement gain/(loss), of profit or netloss Financing activities Financingprevent losses activities of liquid funds deposited with or invested in financial institutions or the loss in value of receivables. Trade payables 46 – 65 37 Operating activities Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Foreign exchange non-deliverable forward contracts, net (5) 44 Other financial gain/(loss), net Interest payables 1 – 3 1 TheForeign maximum exchange exposure non-deliverable to credit risk forward resulting contracts, from financial net assets is equal(8) to the carrying8 amount Other operatingof the Group’s income/(expenses), financial assets, net Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net Deferred payable related to acquisition of additional interest in subsidiary 2 – – – whichTotal at 31 December 2020 amounted to US$1,262 million (31 December(16) 2019: US$918 55million). The Group has no significant Operating activities concentrationsOperating activities of credit risk. Deferred payable related to mineral rights acquisition – – – 1 During the year ended 31 December 2020, there was no material hedge ineffectiveness. Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net Total current financial liabilities 373 51 375 118 Cash and cash equivalents, restricted cash and fixed-term deposits. Cash and term deposits are mainly placed in major Total (16) 55 TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 Total financial liabilities 373 51 375 657 multinational banks and banks with independent credit ratings. No bank balances and term deposits are past due or impaired. (See the analysis by credit quality of bank balances, term and fixed-term deposits in Note 14). During the year ended 31 December 2020, there was no material hedge ineffectiveness. During the year ended 31 December 2020, there was no material hedge ineffectiveness. 2020 The Group’s sales for the years ended 31 December 2020 and 31 December 2019 are presented in the table below: OriginatedAs at 1 January loans. Originated loans are issued to companies which are under common control with the Group and to associated – The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: Other companyEffective portionor joint ofventure changes of thein fair Group. value of cash flow hedges (16) US$ EUR RUB currencies Total2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 Receivables for sale of subsidiaries. As at 31 December 2020, the receivable for sale of subsidiaries is due from companies which 2020As at 1 January 3,395 1,087 857 827 6,166 – TaxAs at effect 1 January (5)– 55% 18% 14% 13% are under common control of the Group, which means that collection of these receivables can be reasonably assured. Effective portion of changes in fair value of cash flow hedges 100% (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) 2019Transfer of changes in fair value of cash flow hedges to profit or loss3,376 1,158 1,081 569 6,184 55 Trade Transfer receivables. of changes Trade in fair receivables value of cash are flow subject hedges to a to policy profit of or active loss credit risk management which focuses on an assessment of 55 Tax effect 55% 19% 17% 9% 100% (5) Taxongoing effect credit evaluation and account monitoring procedures. The objective of the management of trade receivables is to sustain the(5) growth and profitability of the Group by optimising asset utilisation while maintaining risk at an acceptable level. Total hedging reserve as at 31 December 34 Total hedging reserve as at 31 December 34 Receivables management is geared towards collecting all outstanding accounts punctually and in full to avoid the loss of receivables. Additionally, the Group sells certain trade receivables to a factor on a non-recourse basis.

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33 FINANCIAL AND CAPITAL RISK MANAGEMENT / CONTINUED 1933 DERIVATIVEFINANCIAL AND FINANCIAL CAPITAL ASSETS RISK MANAGEMENT AND LIABILITIES / CONTINUED / CONTINUED 33.1 FINANCIAL RISK MANAGEMENT / CONTINUED 33.1 FINANCIAL RISK MANAGEMENT / CONTINUED 31 December 2019 Advances to Suppliers and Contractors. Advances given to suppliers and contractors are subject to a policy of the supplier credit The table below analyses the Group’s financial liabilities into the relevant maturity groupingsDerivative based on assets the time remainingDerivative from liabilities the risk 19management DERIVATIVE which focuses FINANCIAL on ongoing credit ASSETS limit evaluati ANDon and LIABILITIES monitoring goods/services / CONTINUED supply contract performance. reporting19 DERIVATIVE date to the contractual FINANCIAL maturity date. ASSETS AND LIABILITIES / CONTINUED(million US$) (million US$) Operating activities The monitoring and controlling of credit risk is performed by the corporate treasury function of the Group.31 December The credit 2019 policy requires Less than Between Between31 December 2019More than the performance of credit evaluations and ratings of all counterparties, including customers, suppliersDerivative and assets contractors. TheDerivative credit liabilities Commodity swaps and collars 1 year 1 and 2 yearsDerivative2 and 5 assets years 5 yearsDerivative liabilitiesTotal quality of each new customer, supplier or contractor is analysed using internal credit rating before the(million Group US$) provides it with the(million US$) 2020As at 31 December 2020 (million US$)– (million US$)2 Operating activities Operating activities 527 – – – 527 terms of delivery and payment, or terms of advance payments in the case of suppliers and contractors. The Group gives preference Trade payables to counterpartiesCommodity swaps with anand independent collars credit rating. New counterparties without an independent credit rating are evaluated with CommodityGross-settled swaps swaps:** and collars Derivative Derivative reference to Group’s credit policy which is based on minimum of two ratings: internal creditworthiness rating and internal payment • inflows (104) Currency(448) pair Volume (1,075)(million assets (million– liabilities(1,627) 2020 – 2 2020 (sell/buy) US$)– US$) (million US$)2 discipline rating. The credit quality of other counterparties is assessed taking into account their financial position, past experience and • outflows 50 435 1,001 – 1,486 other factors. Operating activities Derivative Derivative Non-deliverable forward contracts 16 2 1 Derivative– Derivative19 Customers, suppliers and contractors that do not meet the credit quality requirementsCurrency are supplied pair Volume on a (million prepayment assets basis(million only andliabilities Foreign exchange non-deliverable forward contracts, net Currency pair Volume (million assets (million liabilities (sell/buy) US$) US$) (million US$) Bank borrowings* 1,336 (sell/buy)614 1,052US$) US$)19 (million3,021 US$) receive no advance payments. Project2020 Finance* 84 USD/RUB83 212 135 2609 639– Operating activities Operating activities Bonds2020 issued* 267 BRL/USD381 1,800 33 – 2,448– AlthoughForeign the exchange collection non-deliverable of receivables couldforward be contracts, influenced net by economic factors, management believes that there is no significant risk Foreign exchange non-deliverable forward contracts, net of loss to the Group beyond the ECL allowance and provision for impairment already recorded (Note 13). LeaseFinancing liabilities activities 9 7 11 22 49 2020 USD/RUB 135 9 – 2020 USD/RUB 135 9 – OtherForeign current exchange and non-currentnon-deliverable liabilities forward contracts, net – 1 3 12 16 The2020 major part of trade receivables that are not individually impaired (only ECL allowanceBRL/USD was created for these 33 receivables)– relates – 2020 BRL/USD 33 – – to wholesale distributors and steel producers for which the credit exposures and related ratings are presented below: Total2020 2,185 USD/EUR1,075 3,005 76 313– 6,5788 Financing activities Financing activities 2020 BRL/USD 32 – 1 Foreign exchange non-deliverable forward contracts, net 31 December 31 December Foreign exchange non-deliverable forward contracts, net Group of customers Rating agency Credit rating/Other 2020 2019 2021As at 31 December 2019 USD/EUR 80 – 7 2020 USD/EUR 76 – 8 Trade2020 payables 508 USD/EUR– 76– – 5088 Wholesale customers – Credit Insurance 1 3 Cross currency interest rate swaps, net Gross-settled swaps:** Wholesale2020 customers – Letter ofBRL/USD credit 32 85 – 28 1 2020 USD/RUBBRL/USD 310 32 – 151 • inflows (375) (68) (921) – (1,364) Wholesale2021 customers – Bank guaranteeUSD/EUR 80 2 – 5 7 20212022 USD/RUBUSD/EUR 292 80 21– –7 Wholesale customers and 2020: A+ to BBB- • outflows 346 30 838 – 1,214 Cross currency interest rate swaps, net Cross2023 currency interest rate swaps, net USD/RUB 511 38 – steel producers Fitch 2019: A+ to BBB- 3 14 Non-deliverable forward contracts 9 7 – – 16 2020 USD/RUB 310 – 15 2020Total derivative financial assets/liabilities USD/RUB 310– 68– 3315 34 40 Bank borrowings* 1,164 858 620 – 2,642 Wholesale2022 customers Dun & Bradstreet Credibility Corp.* MinimumUSD/RUB risk of failure 292 21 – 2022 USD/RUB 292 21 – Wholesale customers Dun & Bradstreet Credibility Corp.* Lower than average risk 64 27 ProjectThe impact Finance* of cash flow hedges of foreign currency risk on comprehensive 73income and profit 77 or loss was 213 as follows: 298 661 2023 USD/RUB 511 38 – 2023 USD/RUB 511 38 – Wholesale customers Dun & Bradstreet Credibility Corp.* Average risk of failure 21 35 Bonds issued* 487 241 1,724 – 2,452 Total derivative financial assets/liabilities – 68 33 Total derivative financial assets/liabilities 2020 – 68 33 Wholesale customers CreditInfo A-very good 1 2 Lease liabilities 10 Gain/(loss)11 9 37 67 WholesaleThe impact customers of cash flow hedgesCreditInfo of foreign currency risk on comprehensive incomeLower than and averageprofit or lossrisk was as follows:6 5 OtherThe impact current of andcash non-current flow hedges liabilities of foreign currency risk on comprehensiveGain/(loss) income2 reclassified and profit– or loss was 177 as follows: 13 192 recognised in from other Wholesale customers CreditInfo Average risk of failure2020 1 2 Total other2,224 comprehensive 1,156 2020 2,660 348 6,388 Line in the consolidated Gain/(loss) comprehensive incomeGain/(loss) to profit Wholesale customers Counterparties with internal credit rating Minimum risk of failure 76 4 * The table above shows undiscounted cash outflows for financial liabilities (includingincome interest togetheror with loss the borrowings) based on statementconditions ofexisting profit asor lossat Gain/(loss) reclassified 31 December 2020 and 31 December 2019, respectively. Gain/(loss) reclassified Wholesale customers Counterparties with internal creditrecognised rating in Lowerfrom than other average risk 19 17 Financing activities recognised in from other ** Payments in respect of the gross settled swaps will be accompanied by related cash inflows. Wholesale customers Counterparties with internal credit ratingother Averagecomprehensive risk of failure 1 1 Foreign exchange non-deliverable forward contracts, net other(5) comprehensive44 Other financial gain/(loss), net comprehensive income to profit Line in the consolidated comprehensive income to profit Line in the consolidated Total income or loss statement314 of profit 183 or loss TheCross Group currency controls interest the minimumrate swaps, required net level of liquidity, consistingincome of cash(3) balances,or lossas3 well as committedOther financialundrawnstatement gain/(loss),bank of profit faci orlities netloss * IndependentFinancing credit activities rating agencies used by the Group for evaluation of customers’ credit quality. availableFinancingOperating for activitiesactivities short-term payments in accordance with the financial policy of the Group. Such liquidity are represented by current cash balances on bank accounts, bank deposits, short-term investments, cash and other financial instruments, which may be classified as TheForeign rest of trade exchange receivables non-deliverable is analysed forward by management contracts, netwho believes that the(5) balance of the44 receivables Otheris of good financial quality gain/(loss), due to net Foreign exchange non-deliverable forward contracts, net (5)(8) 448 Other operatingOther financialincome/(expenses), gain/(loss), net cash equivalents in accordance with IFRS, as well as undrawn committed bank facilities. strongCross business currency relationships interest rate with swaps, these net customers. The credit risk of every individual(3) customer3 is monitored.Other financial gain/(loss), net TotalCross currency interest rate swaps, net (16)(3) 553 Other financial gain/(loss), net Operating activities TheOperating Group activitiesassesses liquidity on a weekly basis using a twelve-month rolling cash flow forecast. (c) Liquidity risk During the year ended 31 December 2020, there was no material hedge ineffectiveness. LiquidityForeign risk exchange results from non-deliverable the Group’s potential forward inabilitycontracts, to netmeet its financial liabilities,(8) such as 8settlements Other operating of financial income/(expenses), debt and net Foreign exchange non-deliverable forward contracts, net (8) 8 Other operating income/(expenses), net paymentsTotal to suppliers. The Group’s approach to liquidity risk management is(16) to maintain sufficient55 readily available reserves in order TotalThe impact of cash flow hedges of foreign currency risk on changes in equity(16) was as follows:55 to meet its liquidity requirements at any point in time. During the year ended 31 December 2020, there was no material hedge ineffectiveness. During the year ended 31 December 2020, there was no material hedge ineffectiveness. 2020 While managing its liquidity, the Group aims to ensure that it is sufficient to meet its short-term existing and potential obligations. At As at 1 January – The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: The impact of cash flow hedges of foreign currency risk on changes in equity was as follows: the same time, the Group strives to minimise its idle cash balances. These goals are achieved by ensuring, among other things, that Effective portion of changes in fair value of cash flow hedges (16) there is a sufficient amount of undrawn committed bank facilities at the Group’s disposal at all times. This may result, from time to 2020 Transfer of changes in fair value of cash flow hedges to profit or loss 202055 time,A sin at the 1 JanuaryGroup’s current liabilities exceeding its current assets. – TaxAs at effect 1 January (5)– In orderEffective to take portion advantage of changes of financing in fair value opportunities of cash flow in the hedges international capital markets, the Group maintains credit ratings from (16) TotalEffective hedging portion reserve of changes as at in31 fair December value of cash flow hedges 34(16) StandardTransfer & Poor’s, of changes Fitch inand fair Moody’s. value of Ascash at flow31 December hedges to 2020, profit St orandard loss & Poor’s affirmed the Group’s rating at BB “minus” with 55 Transfer of changes in fair value of cash flow hedges to profit or loss 55 positiveTax effectoutlook (31 December 2019: BB “minus” with positive outlook), Fitch affirmed at BB with stable outlook (31 December 2019: (5) Tax effect (5) BB withTotal stable hedging outlook) reserve and as Moody’s at 31 December affirmed at Ba2 with stable outlook (31 December 2019: Ba2 with stable outlook). 34 Total hedging reserve as at 31 December 34 Cash flow forecasting is performed throughout the Group. Group Finance monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (Note 16) at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance and compliance with internal balance sheet ratio targets.

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EuroChem Annual Report and Accounts 2020 147 EuroChem Annual Report and Accounts 2020 147 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS / CONTINUED CONTACT INFORMATION FOR THE YEAR ENDED 31 DECEMBER 2020 EuroChem Group AG Baarerstrasse 37, 6300 Zug, (all amounts are presented in millions of US dollars, unless otherwise stated) Switzerland

Tel: +41 (41) 727 16 00 Fax: +41 (41) 727 76 06 33 FINANCIAL AND CAPITAL RISK MANAGEMENT / CONTINUED www.eurochemgroup.com 33.2 CAPITAL RISK MANAGEMENT Investor Relations The Group’s objective when managing capital are to safeguard its ability to continue as a going concern, to provide returns for [email protected] shareholders19 DERIVATIVE and benefits for otherFINANCIAL stakeholders, ASSETS to have available AND theLIABILITIES necessary financial / CONTINUED resources for investing activities and to maintain an optimal capital structure in order to reduce the cost of capital. The Group considers total capital under management 31 December 2019 Communications Department to be equity excluding cumulative currency translation differences as shown in the IFRS consolidated statement of financial position. Derivative assets Derivative liabilities [email protected] This is considered more appropriate than alternatives, such as the value of equity shown in the Company’s(million US$) statutory financial (million US$) (accounting) reports. Operating activities EuroChem’s statutory auditor TheCommodity Group monitors swaps capital and collars on the basis of the gearing ratio. Additionally, the Group monitors the adequacy of its debt levels using PricewaterhouseCoopers AG (PwC) Gotthardstrasse 2, 6302 Zug, the 2020net debt to EBITDA ratio. – 2 Switzerland Gearing ratio The gearing ratio is determined as net debt to net worth. The net worth is calculated as shareholder’s equity excludingDerivative the Derivative Tel: +41 (58) 792 68 00 Currency pair Volume (million assets (million liabilities cumulative currency translation differences as this component of equity has no economic(sell/buy) or cash flow significance.US$) For US$)the purposes(million US$) www.pwc.com of the Group’s covenants in its external borrowing agreements, where appropriate, net debt consists of the sum of short-term Operating activities borrowings, long-term borrowings and bonds balance outstanding, less cash and cash equivalents, fixed-term deposits and current restrictedForeign cash. exchange non-deliverable forward contracts, net 2020 USD/RUB 135 9 – The gearing ratio as at 31 December 2020 and 31 December 2019 is shown in the table below: 2020 BRL/USD 33 – – 31 December 31 December Financing activities 2020 2019 TotalForeign debt exchange non-deliverable forward contracts, net 4,852 4,518 Less:2020 cash and cash equivalents and fixed-terms deposits and current restricted cash USD/EUR 76 574 – 317 8 Net 2020debt BRL/USD 32 4,278 – 4,201 1 Share2021 capital USD/EUR 80 – – – 7 FORWARD-LOOKING STATEMENTS Retained earnings and other reserves 8,078 7,590 Cross currency interest rate swaps, net This Annual Report has been prepared by EuroChem Group AG Net 2020worth USD/RUB 310 8,078 – 7,590 15 (‘EuroChem’ or the ‘Company’) for informational purposes, and may include forward-looking statements or projections. These forward-looking Gearing2022 ratio USD/RUB 292 0.53 21 0.55 – statements or projections include matters that are not historical facts or Net2023 Debt/EBITDA USD/RUB 511 38 – statements and reflect the Company’s intentions, beliefs or current TheTotal Group’s derivative covenants financial under assets/liabilitiesthe terms of loan agreements and issued Eurobonds stipulate that Net Debt/EBITDA– should 68 not exceed 33 expectations concerning, among other things, the Company’s results of the level of three and a half times (3.5x). For the purpose of the ratio calculation, net debt is determined in the same way as described operations, financial condition, liquidity, performance, prospects, growth, in theThe Gearing impact ratio of cash section. flow hedges of foreign currency risk on comprehensive income and profit or loss was as follows: strategies and the industry in which the Company operates. By their 2020 nature, forwarding-looking statements and projections involve risks and The ratio of net debt to EBITDA as at 31 December 2020 and 31 December 2019 is shownGain/(loss) in the table below: uncertainties because they relate to events and depend on circumstances Gain/(loss) reclassified that may or may not occur in the future. The Company cautions you that Note 2020 2019 recognised in from other forward-looking statements and projections are not guarantees of future EBITDA other comprehensive 7 1,809 1,545 performance and that the actual results of operations, financial condition comprehensive income to profit Line in the consolidated Elimination of EBITDA of subsidiaries under the Project Finance income or loss 17 statement(66) of profit (54) or loss and liquidity of the Company and the development of the industry in EliminationFinancing of EBITDAactivities of port terminals from 1 January 2020 to the date of sale (49) – which the Company operates may differ materially from those made in or suggested by the forward-looking statements or projections contained in EliminationForeign ofexchange EBITDA ofnon-deliverable Turkish subsidiary forward from contracts, 1 January net 2019 to the date of(5) sale 44 Other financial– gain/(loss), (2) net this publication. Factors that could cause the actual results to differ Elimination of net profit share of disposed associate from 1 January 2019 to the date of sale – (1) Cross currency interest rate swaps, net (3) 3 Other financial gain/(loss), net materially from those contained in forward-looking statements or CovenantOperating EBITDA activities 1,694 1,488 projections in this publication may include, among other things, general Net Foreigndebt exchange non-deliverable forward contracts, net (8) 8 Other operating 4,278income/(expenses), 4,201 net economic conditions in the markets in which the Company operates, the Net Totaldebt/Covenant EBITDA (16) 55 2.53 2.82 competitive environment in, and risks associated with operating in, such markets, market change in the fertilizer and related industries, as well as CovenantDuring EBITDA the year is ended calculated 31 December including 2020,EBITDA there of acquired was no material associates hedge and ineffectiveness.subsidiaries for the period from 1 January to the date of many other risks affecting the Company and its operations. In addition, acquisition and excluding EBITDA of subsidiaries under the Project Finance for the year and EBITDA of subsidiaries from 1 January to even if the Company’s results of operations, financial condition and the Thedate impact of sale. of cash flow hedges of foreign currency risk on changes in equity was as follows: liquidity and the development of the industry in which the Company 2020 operates are consistent with the forward-looking statements or projections contained in this publication, those results or developments As at 1 January – may not be indicative of results or developments in future periods. The Effective portion of changes in fair value of cash flow hedges (16) Company does not undertake any obligation to review or confirm Transfer of changes in fair value of cash flow hedges to profit or loss 55 expectations or estimates or to update any forward-looking statements or Tax effect (5) projections to reflect events that occur or circumstances that arise after Total hedging reserve as at 31 December 34 the date of this publication. STATEMENTS REGARDING COMPETITIVE POSITION Statements referring to EuroChem’s competitive position are based on the Company’s belief and, in some cases, rely on a range of sources, including investment analysts’ reports, independent market studies and EuroChem’s internal assessments of market share based on publicly available information about the financial results and performance of market participants.

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