Uralchem, Russia’s biggest potash and ammonium nitrate producer, expects the opening of an ammonia export terminal near the Black Sea to make a pipeline across Ukraine much less important.

Russia, the world’s biggest fertiliser exporter, has repeatedly warned that Western sanctions over the conflict in Ukraine have hindered its global grain and fertiliser exports.

Moscow has been pushing for ammonia supplies via a pipeline through Ukraine to the port of Odesa, which has lain idle since last year, to be resumed as part of talks with Kyiv, the United Nations and Turkey to help alleviate a global food crisis.

Russia was the top fertiliser exporter in 2021, followed by China, Saudi Arabia, Oman and Egypt, the World Bank says.

Uralchem CEO Dmitry Konyaev told Reuters that a specialised ammonia terminal whose first construction stage is due to be completed on the Taman Peninsula in southern Russia by the end of 2023 could be a substitute for the Odesa pipeline.

“This can replace the volumes of ammonia transshipment which were previously provided … in Odesa,” Konyaev said in an interview. “But it also will give Russian producers … a window to the world in terms of ammonia shipment and trade.”

At the first stage, the Taman terminal could handle 1.5 million tonnes of ammonia per year and by the end of 2025, 3.5 million tonnes of ammonia and 1.5 million tonnes of urea.

Konyaev said Ukraine was politicising the talks on potentially opening the pipeline to Odesa.

“The Ukrainian side is mixing a large set of political conditions with the issue of opening an ammonia pipeline, a commercial transaction,” he said.

Uralchem, which traces its roots to a Tsarist-era soda factory rebuilt by the Bolsheviks after Russia’s civil war, is one of the world’s biggest global players on the fertiliser market with assets including Uralkali URKA.MM, and plants in Perm, Kirov, Voskresensk, and Kaliningrad.

But Russian fertiliser exports fell by 10-15% in 2022, Konyaev said, while Uralchem’s export volumes probably dropped by a quarter or even a third.

“Flows are being restored, it just takes time to work out new logistics routes, work out delivery terms with customers and payments,” Konyaev said, adding that India, China, Southeast Asia and Brazil were key markets and that Uralchem still exports potash to the United States.

“The USA, unlike the EU, is business-like: if it is profitable for them, then they buy,” he said.

‘DESTRUCTIVE EFFECT’

Russia says fertilisers mined from what are thought to be the dried remains of ancient seas near the Ural mountains form part of a delicate global supply chain which helps feed the world’s growing population.

If those fertilisers cannot get to market, Konyaev said, more of the world’s poorest people will go hungry.

The United Nations estimates up to 828 million people do not have enough food and 43 million are at serious risk of famine, mostly in Yemen, South Sudan, Ethiopia and Nigeria.

Konyaev said Western assertions that as fertiliser itself was not sanctioned there was not a problem were fatuous as a whole spectrum of transactions and logistics was required.

“For us, sanctions are having a destructive effect.”

Bankers were very cautious, while insurance and machinery were also an issue, he said, citing an order for a press for granulated potassium which was not supplied from the West.

Konyaev said the seizing of fertilisers in the West had cost Uralchem more than $200 million, pointing in particular to the Asian Majesty ship with a load of 60,000 tonnes of potash that has been sitting in open sea off Riga since March 2022.

Russia, he said, had made efforts to donate the fertiliser to poorer countries and he hoped the Asian Majesty would soon be freed to leave for Sri Lanka. Other frozen cargoes had gone to Malawi and Kenya, with another bound for Nigeria soon, he said.

‘UNFROZEN’

Uralchem was founded in 2007 by former military translator Dmitry Mazepin. After cutting his teeth in the chaos of post-Soviet business, he began collecting stakes in fertiliser firms.

After the European Union sanctioned Mazepin in March 2022, he ceded control of Uralchem, though hundreds of thousands of tonnes of Russian fertilisers and billions of dollars worth of funds were frozen in Europe.

Mazepin retains a major stake in Uralchem, but has resigned from all positions in the company, Uralchem said.

Konyaev, who owns a minority stake in Uralchem, said that although some of its assets in Europe had been unfrozen, the lion’s share of those in the West remained frozen.

“Money is being unfrozen to support assets that operate and function in Europe,” he said.

Asked if Uralchem would be interested in buying the assets of Western grain traders who had left Russia, Konyaev said: “We, in principle, are interested in everything related to agriculture and want to develop.”

“Yes, we have been thinking about grain assets, but so far there are no significant events,” he added.
Source: Reuters (Additional reporting by Polina Devitt in London; Editing by Alexander Smith)