
Sergey Chemezov
Chairman of the Board of Directors
Independent Director
Welcome to our 2013 Integrated Report. Our aim is to clearly articulate our business, results and objectives to our key audiences, focusing on important issues and maintaining our commitment to address and report on our responsibilities and actions.
We strive to be an efficient and transparent company for all our stakeholders.
We create value by the joint efforts of a dedicated team to become the leader of the potash industry in every aspect. While we are working hard to maintain our cost leadership position in the industry, our top priorities are: zero accidents and incidents, minimisation of negative environmental impacts, and the high quality of our products.
At the same time,
we invest in our people and in developing and promoting high-performing employees.
We produce potash fertilisers to ensure people all over the world are provided with food, and to support the growth of our Company and the welfare of our employees and local communities, through efficient and responsible development of unique potash deposits.
Our activities are guided by the following values:
Life is priceless
We have the courage to hear and tell the truth
Honesty towards yourself and others creates the basis for trust
Results make our work valuable
All of us can improve the
Company’s work
We strive to do everything better
than others
Only through collaboration
can we reach set targets
Our vertically integrated business model enables us to maintain control across our entire value chain from potash ore reserves to end customers, which helps to reduce supplier risks and allows us the flexibility to optimise across all stages.
Our customer-focused revenue maximisation strategy is aimed at Uralkali being a global leader in the potash industry, responding to market opportunities, which is consistent with our continued commitment to the long-term growth of our shareholder value.
Enhance global responsible leadership
position
Focus on enhanced
relationships with end customers
Maintain cash cost leadership
positions
Balance investment in growth with
shareholder returns
Focus on people, communities,
safety and environment
Continued focus
on corporate governance
Solid demand for potash fertilisers is supported by the growing need for food globally. At Uralkali, we create long-term value through our focus on meeting the world’s growing demand for food, taking advantage of the control that we have over our entire vertically integrated production chain – from potash ore mining through to the supply of potash to customers.
Our existing assets include five mines, one carnallite plant and six potash plants where we make standard white and pink potash, as well as the premium granular potash. We have two greenfield expansion projects that, together with optimisations and capacity growth in our existing operations, will contribute to our capacity expansion programme. We also benefit from the lowest cash costs in the industry, which helps us maintain our leadership position.
We have the advantage of one of the shortest transportation routes from mine to port, as well as to key customer markets, to which we deliver via our own 8,000 specialised railcar fleet and Baltic transhipment terminal. A recently acquired strategic stake in the port terminal of Antonina, Brazil, ensures efficient supply to this region with its fast-growing potash demand. This enables us to build on our market-leading position, optimise storage at our warehouses and expand capacity in the short and medium term.
We are focused on building strong relationships with our customers in more than 60 countries. Our strategy is to maximise revenue and sustain our historical market share, with focus on fast-growing markets such as Latin America, South East Asia, China and India, which have traditionally accounted for around 60% of our total sales.
As the global population grows together with the need for agriculture products, our leadership position and capacity development programme enable us to increase deliveries in line with rising demand. Moreover, we share agronomic expertise with our customers to provide them with the knowledge to use our products in the most efficient way for optimal yields.
Net revenue (potash)
(US$ mln)
$2,665 mln
Achieved capacity
(mln t)
13 mln t
Total shareholder return (TSR)
(%)
-28%
Sales volume
(mln t)
9.9 mln t
Production volume
(mln t)
10.0 mln t
Cash COGS per tonne
(US$)
$58
Sustenance CAPEX
(US$ mln)
$241 mln
EBITDA margin
(%)
61%
Dividend payout
(%)
50%
Net debt/LTM EBITDA
2.5x
Expansion CAPEX
(US$ mln)
$224 mln
Work-related fatal injury frequency rate
(FIFR)
0.000
Lost time injury frequency rate
(LTIFR)
0.12
Social investments
(US$ mln)
$31.7mln
Voluntary labour turnover
(%)
11.6%
Average annual wages (production personnel)
(US$)
$15,600
Output per capita (production personnel)
(tonnes per person)
1,317t/p
Energy consumption
(kWh/tonne)
155 kWh/t
Maintaining of credit ratings
A proactive stakeholder engagement programme helps us to respond effectively to changes in the Company’s operating environment. This table identifies our key stakeholder groups. It outlines why we engage with them and reflects the key sustainability issues and progress on our performance and engagement with them.
As a vital element of the Company’s strategy, the reliable and transparent relationship with our customers and partners drives the Company’s performance. Positioned as an industry leader, Uralkali aims to sustain this mutually beneficial partnership to ensure progress and promote development in all spheres.
As a publicly listed company we need to provide open, timely and transparent information to help our investors make informed decisions about our financial and non-financial performance.
Every aspect of our strategy is based on the commitment of our people. Their knowledge, their willingness to work and their satisfaction are the keys to the Company’s successful operations. We put an emphasis on creating the conditions for professional and career growth for our people. It is essential for us, and strengthens loyalty to the business.
Efficient cooperation with the trade unions is essential for the Company in understanding and fulfilling employees’ expectations. Trade unions help to monitor the implementation of all health and safety rules and other important agreements.
The Company’s leading position implies
a responsibility to follow industry standards
and comply with local and international
laws and regulations.
Uralkali aims to establish and maintain stable
and constructive relations with national and local
government authorities, based on the principles
of accountability, good faith and mutual benefit.
The development of the Company needs to
be supported by the local communities
wherever it operates.
Sustainability of ecosystems, biodiversity and a
healthy environment are vital conditions for the
wellbeing of future generations.
A better quality of life for our people and local
communities through our social and cultural projects
contributes to regional social and economic
development and ensures the sustainability of our
operations, helping us to fulfil our commitments as
an industry leader.
The Company needs accurate and timely coverage
by the various media channels when disclosing its
financial and operational results, important external
and internal events, community involvement,
participation in industry conferences, international
and local exhibitions, etc.
The correct perception of the Company and its
strategy by all stakeholders is mutually beneficial for
Uralkali and its target audiences.
“We seek to apply global best practices in our own organisation and
introduce
them into our relations with our business partners.”
- Sir Robert Margetts, Chairman of the CSR Committee
Why these issues are
important to us
Absence of fatalities, incidents, accidents and occupational diseases is one of the key goals of an efficient business. Each employee expects to work in a healthy environment. At the same time the Company expects its employees to follow the safety rules. Jointly supporting these principles we will be able to bring our business to a higher level of performance and a sustainable future.
Why these issues are
important to us
Sustainability of ecosystems, biodiversity and a healthy environment are vital conditions for the wellbeing of future generations. For this reason, a responsible approach to the environment is core to our business.
Why these issues are
important to us
The successful realisation of a business strategy is entirely dependent on people: their management skills, professional knowledge and commitment to the Company’s values and corporate ethos. Therefore, Uralkali creates ideal conditions for professional growth and career progression and develops ways to build and strengthen company loyalty and team efficiency.
Why these issues are
important to us
Realisation of major projects is a very demanding task without an open dialogue within society as we work for sustainable development in the territories where the Company operates. We improve the living standards of local communities and create a close partnership with society.
“The Company is well positioned for 2014 and beyond as global demand recovers.”
I highly value the trust shown in me by the Company’s shareholders.
In cooperation with the management, we will work efficiently in the interests of all shareholders while observing corporate governance best practices.
Sergey Chemezov
Chairman of the Board of Directors
Independent Director
Member of the Board of Directors
Independent Director
Member of the Board of Directors
Non-Executive Director
Director for Economics and Finance
Procurement Director
Director for Legal and Corporate Affairs
“The challenging market environment in H1 2013 had a negative impact on our operational and financial results. However, following the adjustment in the Company’s sales strategy in July 2013, we saw some improvement in H2 2013 and are planning to maintain this momentum in 2014.” Viktor Belyakov, CFO
Uralkali capitalises on long-term market fundamentals. Demand for potash is expected to improve steadily in the coming years, as agriculture remains the key source of food and an important provider of fibre and fuel for the world’s constantly growing population.
Potash is a vitally important element, necessary for the functioning of all living cells. It is a natural component of soils and, along with phosphorus and nitrogen, an irreplaceable nutrient for plants and agricultural crops. Balanced plant nutrition can only be ensured by regular and timely application of these three main macronutrients.