Keeping Our Focus 2 We Have Come a Long Way 3 Our Vision 15 4 Business Model Celebrating Years 8 Geographical Footprint

EUROCHEM ANNUAL REPORT AND ACCOUNTS 2016 AND ACCOUNTS REPORT ANNUAL Keeping our focus 2016 Annual Report and Accounts Contents Strategic Report 1 Keeping our focus 2 We have come a long way 3 Our vision 15 4 Business model Celebrating years 8 Geographical footprint 10 Product overview 4-7 Business model 12 Our marketplace 16 Chief Executive Officer’s review 18 Strategy 20 Performance review 20 Group performance 25 Market overview 26 Mining 34 Oil and gas 36 Fertilizers 40 Logistics 16-17 Chief Executive Officer’s review 42 Sales 45 Selected key events 2016 46 Q&A with Senior Management 50 Sustainability 54 Risks and uncertainties 59 Our assets Corporate Governance 60 Chairman’s statement 62 Board of Directors 28-31, 38-39 Transformational projects 64 Board Committees 66 Corporate Governance Report 72 EuroChem Group AG Committees Financial Statements 76 Independent Auditor’s Report 81 Consolidated Statement of Financial Position 83 Consolidated Statement of Profit or Loss and Other Comprehensive Income Cover image: EuroChem Usolskiy Potash 84 Consolidated Statement of Cash Flows 86 Consolidated Statement of Changes in Equity 87 Notes to the Consolidated Financial Statements 148 Key financial and non-financial data 152 Contact information Keeping our focus A clear strategic focus on lasting value creation At EuroChem we focus on how we can increase value over the long term. This means continuing to produce and deliver quality products for our customers, providing fulfilling careers for our employees, acting as a responsible and proactive business partner, enthusiastically participating in our communities and delivering sustainable rewards to our shareholders. 2020 1. 2. 3. Implementing Operating with flexibility Robust corporate our long-term vision and resilience governance underpinned and strategy by strong shareholder commitment Our clear and consistent approach Our ability to adapt to changing The confidence and commitment ensures we retain our focus on growing conditions helps us remain efficient, of our shareholders continues the business in line with our vision. competitive and sustainable. to underpin our drive for growth. Read more Read more Read more on pages 3, 18 on page 4 on page 60 EuroChem Annual Report and Accounts 2016 1 We have come a long way Over the last 15 years, we have built 15 years of a strong and resilient business on the principles of strong corporate governance, successful consistent investment in our vertically integrated business model and carefully progress planned international development. 2001 2002 2005 EuroChem Acquisition of nitrogen First potash license established and phosphate assets and non-Russian asset Acquisition of controlling stakes Purchase of a controlling stake in the Novomoskovskiy Azot and in Lifosa AB. Nevinnomysskiy Azot nitrogen facilities, Phosphorit and EuroChem- Acquires potash mining rights to BMU phosphate facilities and the Gremyachinskoe deposit (VolgaKaliy). Kovdorskiy GOK iron ore and apatite mine. 2010 2008 2006 Secures potash mining rights in Perm region Acquisition of mining rights to Verkhnekamskoe potash deposit (Usolskiy). 2012 2015 2016 First major Focus on self-sufficiency Establishes international and distribution growth presence in Brazil expansion Acquisition of Ben-Trei (US) Acquisition of a controlling stake Acquisition of EuroChem distribution assets. in Fertilizantes Tocantins (Brazil). Antwerpen and Agro. Start of phosphate rock mining in Kazakhstan. Launch of construction of 1 MMT pa ammonia project in Russia. Phase 1 Acquisition Phase 2 Consolidation Phase 3 Growth Acquisition of assets forming Investments in natural resources Global expansion of production backbone of the Group. Cash in Russia, logistics, new footprint and distribution reach flows directed toward overhauls, product lines and management/ ahead of potash production. efficiency upgrades, and HSE. operational systems. 2 EuroChem Annual Report and Accounts 2016 Business model Committed to our customers Our vertically integrated business model provides Our robust set for advanced, cost-efficient and flexible production of capitals… capacity, based on high quality reserves and Natural supported by logistics and distribution assets. Our natural capitals encompass high quality reserves of potash, hydrocarbons, In addition to economies of scale, it also ensures phosphate rock and other raw security of supply to our customers. materials, which together underpin the competitiveness of our business. Human Our business benefits from the support and experience of more than 25,000 employees. From mining to fertilizer production, field services and chartering, the skills and know-how Customer needs What we need to do What we are doing of our employees allow us to present a unique value proposition. Balanced fertilization Multi-nutrient • Launching potash Intellectual business model: capacity The challenges of food security are N Nitrogen • Further increasing driving our R&D efforts to expand K Potash specialty product our product portfolio with proprietary P Phosphates lines to complement specialty products and bio-stimulants, M Micronutrients commodity offering engineered to promote the efficiency of fertilizers and sustainable farming practices. Robust corporate governance, Seasonality of demand Global distribution • Expanding distribution management information, internal control and multi-regional capabilities (North/ and global internal audit systems, as well cost competitiveness South America/ as extensive knowledge resources, Eastern Europe) underpin our business model. Precision agriculture R&D investment • Expanding inhibitor Financial into new products enhanced product line Our robust financial structure controls the and technology • Investing in flow of funds from our operations which, (eg. micronutrients, bio-stimulants coupled with our strong track record inhibitors, (Agrinos) and prudent financial policy, ensure the bio-stimulants) availability of attractive financing options. Together with our shareholders’ Stable/just-in-time Global logistics platform • Increasing commitment, these provide us with suppliers transhipment capacity a resilient base for long-term growth. • Constructing new terminals/warehouse/ Business distribution hubs We make the fertilizer products needed to increase crop yields. Our business Global presence Access to competitive • EuroChem currently capitals comprise production assets and raw materials/feedstock in lowest quartile processing facilities, rail and shipping delivered cost fleets, port facilities and a global to all target distribution platform. markets globally Social We build enduring relationships based Affordable quality Own capabilities in • Consolidating rail on trust and actively engage with a range products repair/maintenance, repair services within of stakeholders – including suppliers, industrial construction, Depot-EuroChem contractors and other third parties – own logistics • Using warehouses/ that meet high standards of compliance, hubs to ensure integrity, health and safety. proper handling until final customer 4 EuroChem Annual Report and Accounts 2016 Vertical integration to maximise value creation Mining We have secured access to a low-cost, high-quality resource base, which includes an estimated 10 billion tonnes of potash Oil and Gas reserves and resources in two key Russian deposits, magnetite-apatite ore in the Kola Peninsula, and phosphate rock in southern Phosphate rock and Potash Oil and Gas Kazakhstan. In the Kola Peninsula, thanks to the particular geological conditions unique to our deposit, our apatite mining Oil and Gas operations also provide us with iron Phosphate rock and Potash ore concentrate. Phosphate rock and Potash Fertilizers We manufacture a broad range of quality nitrogen, phosphate and complex fertilizers. From basic to high-end, our products provide the right solution for every application. Configured to retain their nutrient properties longer, our line of specialty fertilizers ensures an optimal Nitrogen fertilizer facilities supply of nutrients to plants, especially Phosphate fertilizer facilities during critical phases of growth. Phosphate fertilizer facilities Nitrogen fertilizer facilities Phosphate fertilizer facilities Nitrogen fertilizer facilities Logistics Our sophisticated and flexible logistics infrastructure supports our business model and ultimately ensures that our products are delivered to customers in the most efficient way. It comprises trucks, storage and port facilities, rail rolling stock and chartered river barges, Logistics and warehouses across several Sales regions and markets globally. Logistics Sales Logistics Sales Our inter-related capitals are the vital components for EuroChem’s continuing success. Oil and Gas Natural gas is the primary raw material in the production of ammonia, the main Oil and Gas component of nitrogen-based fertilizers and a required input for phosphate and Oil and Gascomplex/NPK products. Representing Phosphate rock and Potash about 20% of the Group’s annual gas intake, our own oil and gas operations Phosphate rock and Potash in Russia’s Yamalo-Nenets Autonomous Oil and Gas Okrug provide security of supply while helping to reduce costs. Phosphate rock and Potash Phosphate fertilizer facilities Nitrogen fertilizer facilities Phosphate fertilizer facilities Nitrogen fertilizer facilitiesFertilizers continued Throughout our production chain, our production processes also yield a wide Phosphate fertilizer facilities Nitrogen fertilizer facilities range of industrial,

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