Oct. 24 (Bloomberg) -- OAO PhosAgro, Europe’s largest producer of phosphate fertilizers, may expand in nitrogen and diammonium phosphate and diversify into alumina after talks with OAO Gazprom and United Co. Rusal.
PhosAgro will consider building a nitrogen plant and a diammonium phosphate plant on the Kola Peninsula to make phosphate fertilizers using natural gas from Gazprom’s Shtokman project if production starts in 2016 as scheduled, said Chief Executive Officer Maxim Volkov.
PhosAgro is also in talks with Rusal to produce as much as 1 million metric tons a year of alumina in Russia’s northwest, requiring nepheline output to rise to as much as 4 million tons, Volkov said in an interview in Moscow Oct. 20. Nepheline, a substitute for bauxite in making alumina, is produced from the same ore used to make phosphate rock, so increasing output would boost overall returns, Volkov said.
PhosAgro is considering investing in expansion after phosphate rock prices almost doubled to $280 a ton in the first half of the year compared with the same period of 2010, according to a presentation on its website. The company raised $538 million in an initial public offering in London in July.
Rusal hasn’t had talks with PhosAgro, Vera Kurochkina, a spokeswoman, said by phone. Sergei Kupriyanov, Gazprom’s spokesman, said the company expects to supply domestic customers from Shtokman, including those on the Kola Peninsula, while declining to be more specific.
PhosAgro expects markets for its products to be stable in the short term. “We see some nervousness on the market, but no decrease in demand,” Volkov said. Phosphate rock should remain at the current $200 a ton, he said.
--With assistance from Marina Sysoyeva in Moscow. Editors: Alex Devine, Amanda Jordan
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