Phosphoric Acid, Phosphates & Fertilizers Experts

EuroChem and ChemChina consider starting joint production in Russia

St. Petersburg, Russia, 1 June 2017 – EuroChem Group AG (“EuroChem” or the “Group”), a leading global fertilizer company, today announces the signing of a Memorandum of Intent (“Memorandum”) with China National Chemical Corporation (“ChemChina”), the largest chemical corporation in China, for a potential partnership to jointly produce industrial products in Russia (the “Project”). Both companies agreed to form a working group to further evaluate the technical feasibility of the Project and will carry out due diligence.

Under the Memorandum, EuroChem and ChemChina consider jointly starting production of industrial products, specifically propylene oxide (propylene glycol and polyols) and isocyanate (MDI/TDI). The former has vast application across many industries, including for the development of synthetic lubricants, surfactants, and polyurethane products, with the latter mainly used for thermal insulation in construction. This will be the first production of its kind for Russia and the CIS which currently rely on imports from Germany, the Benelux countries, the US and Japan. Future output is expected to be sold predominantly in Russia to meet growing internal demand.

If it goes ahead, the Project will be implemented at EuroChem’s Novomoskovskiy Azot plant in the Tula region, Russia. This will allow EuroChem to optimise current production capacity at this facility by integrating the additional downstream production process which will utilise existing by-products and infrastructure. ChemChina will deliver the necessary production technology.

Subject to preliminary estimates, the Project may cost c. USD 500 million. The Project might also attract other potential investors, with the prospect of additional financing from Russia and China.

Dmitry Strezhnev, EuroChem CEO, commented: “We are looking forward to working with ChemChina. This mutually beneficial partnership would complement our existing production, whilst also ending Russia’s reliance on imports through this first production facility of propylene oxide and MDI/TDI in the country.”

Separately, EuroChem signed a Memorandum of Understanding (“MoU”) with the Russian federal and Tula regional authorities to conclude a trilateral special investment contract in support of this potential Project in the Tula region. This MoU creates the necessary framework to aid the Project implementation by establishing a favourable investment environment in the region.

Both of the memorandums were signed at the St. Petersburg International Economic Forum.

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