2015 Integrated Report
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About this report PhosAgro is a Russia-based company and REPORT STRATEGIC one of the world’s leading phosphate-based fertilizer producers, with a sustainable cost The purpose of this integrated 1 What does the organisation do Last year, we published our first Determining our material issues advantage compared to other producers report is to inform the reader and what are the circumstances integrated report, and this year we Information within this report has been about all material issues that have under which it operates? have tried hard to identify what could compiled after conducting a process globally. Our unique, high-quality phosphate the potential to impact our business, 2 How does the organisation’s be improved and better reported. to determine and assess PhosAgro’s raw material from the Apatit mine and GOVERNANCE CORPORATE and to help the reader understand governance structure support We have set a high bar for ourselves: material financial and non-financial beneficiation plant on the Kola Peninsula As a vertically integrated how this influences our strategy, our its ability to create value for we continue to work within the issues. We did this by running both business, we process our operations, our financial performance, stakeholders in the short, framework of the GRI G4 standard internal and external surveys supervised in north-west Russia helps us to remain one apatite-nepheline ore at our the long-term sustainability of our medium and long-term? for sustainability reporting. This process by senior management. Clearly matters of the lowest cash-cost producers globally. own production sites into business and the value we seek to 3 What is the organisation’s involves not only evolving how we report for inclusion in the report are also This raw material, called apatite-nepheline over 33 grades of fertilizers create for our stakeholders. In this business model? externally, but also adapting the way determined by its scope and relate ore, contains almost no cadmium and other and other end products; report, we seek to answer the eight 4 What are the specific risks and in which we evaluate our business to the businesses over which the we sell fertilizers through questions that integrated reporting opportunities which affect the internally in order to ensure that we organisation has operational control. harmful elements, making it safer to use in our own distribution and is meant to address: organisation’s ability to create consider the full spectrum of issues the manufacture of mineral fertilizers that sales network in Russia, FINANCIALS value for stakeholders in the short, as part of our decision-making process. Survey process will be used around the world, at a time as well as with the help medium and long-term? Internally, we surveyed the heads when the safety of the food supply chain of our own sales offices 5 What are the company’s key strategic Our goal with this integrated report is to of our structural divisions and in priority markets like goals and how does it intend to explain our business model and strategy, our key production facilities. is becoming increasingly important. Latin America, Europe achieve them? how we cooperate with our stakeholders, Externally, we surveyed analysts and Asia. Our own logistics INFORMATION ADDITIONAL 6 To what extent has the organisation how we manage material issues and key and investors, representatives of operations, including a achieved its strategic objectives for risks and what our key achievements federal and regional mass media, fleet of railcars and a port the period and what was the effect were in 2015. municipal and regional authorities, in Ust-Luga, also help us on the value of the company for trade union leaders and employees maintain our sustainable stakeholders? Corporate responsibility at our production facilities. 7 What are the key challenges and Our best-quality resource base Regional media were also examined low cash-cost advantage. uncertainties that the organisation is one of the keys to our success. to determine matters that are is likely to encounter in pursuing its PhosAgro’s long-term strategy is important to the people living in strategy and what are the potential aimed at further increasing internal the areas where the Company has implications for the business model processing of our own phosphate rock, an operational presence. and future performance? as well as maintaining our industry- 8 How does the organisation leading low cash cost position. Timing determine which matters are The last survey process was worth including in the integrated In addition, in order to secure the conducted in 2014, and we intend Contents report and how are such matters long-term sustainability of our business to conduct similar surveys regularly quantified or evaluated? model and our operations in Russia, in the future to ensure that our we take a broader view of our interaction understanding of the key material Strategic report Corporate governance Additional information with stakeholders and the material issues is kept up to date and that we Year at a glance 2 Board of Directors 74 Shareholder information 132 issues that could affect our business. meet our stakeholders’ expectations Chairman’s statement 4 Corporate governance 76 Glossary 134 With this report, we want to shed more concerning the management and Meeting our customers’ Management responsibility Names of legal entities requirements 6 statement 90 used in this report 137 light on the extent to which we invest operation of our businesses. Where we operate 7 Contacts 138 in human capital, health and safety, Market overview 10 Financials and the local communities in the regions Chief Executive Auditors’ report 92 where we operate. We provide more Officer’s statement 14 Consolidated statement details on how our governance systems Business model 18 of profit or loss and other have been adapted to address business Our assets 20 comprehensive income 93 conduct issues, what we are doing to What makes us different 22 Consolidated statement Strategy 24 of financial position 94 diminish our impact on the environment Operational review 30 Consolidated statement and how we maintain relationships with Financial review 34 of cash flows 95 our key stakeholders. Environment review 40 Consolidated statement Health and safety review 46 of changes in equity 96 People review 48 Notes to the consolidated Community financial statements 97 investment review 54 Business conduct review 58 Stakeholder engagement 60 Managing our risk 66 Our vision Our purpose PhosAgro is a Russia-based company and REPORT STRATEGIC one of the world’s leading phosphate-based fertilizer producers, with a sustainable cost We want to bring ready We help the world feed advantage compared to other producers crop nutrient solutions itself by producing mineral globally. Our unique, high-quality phosphate to the farmers from over fertilizers that increase raw material from the Apatit mine and GOVERNANCE CORPORATE 100 countries around the the output, quality and beneficiation plant on the Kola Peninsula As a vertically integrated business, we process our world who are our end heartiness of crops. in north-west Russia helps us to remain one apatite-nepheline ore at our customers, helping them of the lowest cash-cost producers globally. own production sites into to meet increasing global By 2050, the global This raw material, called apatite-nepheline over 33 grades of fertilizers demand for food by growing population is expected ore, contains almost no cadmium and other and other end products; we sell fertilizers through superior-quality crops. to expand to 9.6 billion harmful elements, making it safer to use in our own distribution and Our strategy until 2020 calls people, which implies a 60% the manufacture of mineral fertilizers that sales network in Russia, FINANCIALS for investments in upstream, increase in demand for soft will be used around the world, at a time as well as with the help downstream, logistics and commodities just to feed when the safety of the food supply chain of our own sales offices in priority markets like sales operations, all with the the increased population. is becoming increasingly important. Latin America, Europe goal of improving our ability Other factors, such as and Asia. Our own logistics INFORMATION ADDITIONAL to efficiently provide the changing diets and operations, including a best mineral fertilizers to alternative uses for soft fleet of railcars and a port in Ust-Luga, also help us farmers nearly anywhere commodities like ethanol maintain our sustainable in the world. fuels, add to this already low cash-cost advantage. impressive growth These investments build value for our shareholders by enabling us to increase in demand. our internal use of apatite-nepheline ore for value-added end products, to achieve We believe that, by implementing our sustainable cost savings with more efficient strategy aimed at strengthening our core technologies or vertical integration of sustainable advantages, we will build key parts of the value chain, which a business that best serves the local ultimately enables farmers to grow crops communities where we work and the Contents more efficiently and to provide better farmers all over the world who use our quality food to all of us. products, as well as our investors and other stakeholders. Strategic report Corporate governance Additional information Year at a glance 2 Board of Directors 74 Shareholder information 132 Chairman’s statement 4 Corporate governance 76 Glossary 134 Meeting our