Page 166 - RusRPTNov21

product sales were in fact up 1% QoQ.
● Favourable price environment in 3Q21 and iron ore
integration offsets the negative volumes effect, we calculate. As such we expect 6% QoQ higher revenues and a roughly flat QoQ EBITDA performance.
● No working capital build-up might also help FCF generation QoQ, with the yield totalling 6% for the quarter.
Leading Russian metallurgical company Metalloinvest signed off on a deal with a consortium of companies including Austria’s Siemens VAI Metals Technologies GmbH and US-registered Midrex Technologies Inc., to build the world’s biggest hot briquetted iron (HBI) plant in Russia, the company said in a press release on October 21. The plant will be the company’s third HBI facility and is located at the Lebedinsky GOK in Gubkin, in the Belgorod region of Russia. The new plant, which will have a production capacity of 1.8mn tonnes of HBI per year, making it the largest in the world.Total investment in the project will amount to approximately $850mn.
● Fertilisers
Phosagro is considering the construction of an LNG plant in the Murmansk region to supply heat to its phosphate mine and processing plant, and switch its mining machinery from fuel oil to LNG fuel, RBC reports.
· To cover its needs, the company would have to build 20kt of LNG capacity, which would require RUB 2bn capex or 5% of PhosAgro’s annual total.
· CO2 emissions might be reduced by 20% by such a facility. LNG is not a zero emission fuel.
· Meanwhile, the rest of the world is actively investing in the next generation technologies, such as hydrogen and green ammonia. Typically such investments are undertaken through partnerships.
· For example, Moroccan company OCP, the world's largest P-producer:
o is considering switching its mining transport to hydrogen or electricity;
o uses alternative energy (up to 100% wind energy at some plants); and
o substitutes trains delivering ore from shafts to processing plants with slurry pipelines, in addition to other CO2-lowering measures.
· The news might add to investor concerns that under government pressure to increase investment, the company might opt for suboptimal projects.
· The stock is now near its all-time high, reached last Thursday, trading at a 10% premium to Mosaic on EV/EBITDA (vs. a historical discount) and we see a shorting opportunity at current levels.
Phosagro has published its operating data for 3Q21, showing a YoY slide in both production and sales volumes. The reasons were scheduled repairs and the production of more concentrated products, we believe. Total fertilizer output in 3Q21 of 2.5mnt was 1% lower YoY.
● Phosphate production increased 22% YoY, with inputs
166 RUSSIA Country Report November 2021 www.intellinews.com