Our strategy

Building a high-margin, efficient business with a positive growth and development outlook


In 2014, Acron Group’s development strategy did not undergo material changes, and its key objective is still to enhance the Group’s competitive edge and efficiency. Acron Group seeks to become the most efficient NPK producer globally by leveraging its vertical integration and expanding capacity.

The Group’s development strategy is focused on balanced development. The Group seeks to dynamically develop its long-term investment programme without assuming the excessive risk of increased financial burden over the short- and mid-term. Due to a flexible approach to investment planning and the weakening of the RUB to USD exchange rate in 2014, Acron Group was able to cut its net debt 11% in dollar equivalent.

1. Building an efficient and competitive business through vertical integration

Key Performance Indicators Achievements in 2014 Next stepsRisks
  • Comply with licence provisions
  • Self-sufficiency in major raw materials
  • Complete projects milestones
  • CAPEX budget
  • Additional EBITDA for the Group
Phosphates
Oleniy Ruchey mine
  • In 2014, the Group produced 891,000 t of apatite concentrate, up 39% year-on-year, including 180,000 tonnes shipped to third-party consumers.
  • Oleniy Ruchey mine generated EBITDA of USD 30 mln.
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Potash2.
Talitsky mine
  • The design process is underway for the mine facilities. Specifically, the “Engineering design of sylvinite reserves development in the Talitsky area of the Verkhnekamsk potassium-magnesium salt deposit” was approved by the Federal Subsoil Resources Management Agency (Rosnedra) in January 2015.

  • Construction and installation at the freezing unit is complete. The main step-down substation Talitskaya-1 (110/6 kW) was commissioned. Construction of temporary buildings and structures for ground freezing and shaft sinking is underway.
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NAP (Albany Project)

  • Nine permits (586,000 acres) under the Albany project were transferred to the joint venture, established in June 2014.

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Phosphates
Oleniy Ruchey mine
  • Further increase the output in 2015 to reach 1.1 mn t.
  • Continue work on the underground mine and expand the processing plant facility to increase apatite concentrate output by 2017.
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Potash

Talitsky mine
  • The design for the Talitsky mine facilities is complete; design documentation for the mine construction and above-ground facilities are currently undergoing state expert review.
  • Construction of temporary buildings and structures for shaft sinking is underway, followed by ground freezing and shaft sinking.
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NAP (Albany Project)


  • In 2015, the pre-feasibility study and environmental impact research will continue on the Albany and the Foam Lake permits.

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  • Industry risks Operating risks
  • Financial risks
  • Social and environmental risks
  • Legal risks
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2. Improving operating results by building new production facilities

KEY PERFORMANCE
INDICATORS
ACHIEVEMENTS IN 2014 NEXT STEPS RISKS
  • Complete projects milestones
  • CAPEX budget
  • Additional EBITDA for the Group
  • Gas consumption rates for ammonia units
  • Product output volume
New Ammonia-4 unit
  • The unit is under intense construction.
  • Due to the weakening RUB to USD rate, CAPEX for the Ammonia-4 unit in dollar terms is expected to be lower than initially budgeted
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  • In 2014, Acron Group’s Russian facilities consumed an average of 1,078 m 3 of natural gas per tonne of product, down 0.6%.

  • In 2014, principal construction and installation work was completed and comprehensive testing of process equipment for rare-earth elements production commenced.
  • Total commercial output increased to 6.3 mn t from 6.1 mn t.
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  • End of construction and installation, and start-up of new of new 700,000-tpa ammonia unit planned for late 2015.
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  • Further reduction of gas consumption rate and increase of output at the existing ammonia units
  • Measures to decrease heat and power consumption are being introduced at the Group’s facilities.
  • Launch of rare-earth products (lanthanum, cerium and neodymium oxides).
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  • Operating risks
  • Social and environmental risks
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3. Expanding sales markets

KEY PERFORMANCE
INDICATORS
ACHIEVEMENTS IN 2014 NEXT STEPS RISKS
  • Selling prices
  • Sales markets
  • Sales volumes
  • Group sales volumes increased to 6.3 mn t from 6.2 mn t.
  • Group sells its products to 66 countries.
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  • Expanding to sales markets with strong demand and global-price premium.
  • Entering phosphate market as a supplier.
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  • Industry risks
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4. Securing the Group’s solid financial position and reducing the debt burden

KEY PERFORMANCE
INDICATORS
ACHIEVEMENTS IN 2014 NEXT STEPS RISKS
  • Gross and net debt indices
  • Net Debt/EBITDA
  • Average interest rate
  • The Group’s Net Debt in USD equivalent totalled USD 992 mn, down 11%.
  • Gross debt decreased to USD 1,432 mn from USD 1,533 mn.
  • Average annual interest rate as of 31 December 2014 was 4.8% against 4.6% a year before.
  • Part of investment portfolio was monetised (Uralkali shares sold for USD 115 mn).
  • In December 2014, a 5-year syndicated structured preexport finance facility for up to USD 525 mn was executed with a club of partner banks.
  • Acron Group contracted with Sberbank Investments as a co-investor in the Talitsky potash project. The investor acquired 19.9% of VPC.
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  • Further decrease in Net Debt/EBITDA level.
  • Decrease in average interest rate on loans and borrowings
  • Monetisation of portfolio investments and/or non-core assets.
  • Securing sufficient liquidity and increasing the share of long-term debt.
  • Further selection of partners for joint implementation of the potash investment projects.
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  • Industry risks
  • Financial risks
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5. Enhancing corporate governance transparency

KEY PERFORMANCE
INDICATORS
ACHIEVEMENTS IN 2014 NEXT STEPS RISKS
  • Compliance with corporate principles and legal requirements and most significant recommendations of Russian and international corporate governance practices
  • Clear distribution of responsibility among the main management and supervision bodies of the Group’s companies
  • The annual general meeting approved the amended Charter and the amended Regulation on Acron’s General Meeting. The amendments reflect relevant requirements of laws and the best practices of corporate management.
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  • Maintain and improve corporate governance system.
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  • Legal risks
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6. Corporate liability for business conduct

KEY PERFORMANCE
INDICATORS
ACHIEVEMENTS IN 2014 NEXT STEPS RISKS
  • Qualifications of personnel
  • Industrial safety
  • Contribution to economic and social development in regions where the Group has its operations
  • Environmental impact
  • Industry and corporate awards were given to 1,948 of the Group’s employees.
  • Dorogobuzh commissioned a unit for secondary sedimentation of biologically treated wastewater and a wastewater feed line.
  • The total gross air pollutant emission by Novgorod-based Acron and Dorogobuzh did not exceed permitted levels in the reporting year.
  • In 2014, NWPC entered into an agreement on social and economic cooperation with the Kirovsk municipal administration. The Company will contribute RUB 41.6 mn for repairs and equipment for children’s and general education institutions, development of the central square in Koashva settlement, and fostering culture in Kirovsk.
  • All told, Acron Group invested RUB 79.2 mn in social and economic development in its footprint regions.
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  • Enhance the level of employee qualification
  • Measures were introduced to decrease the discharge of air and water pollutants and reduce the generation and storage of consumer and production waste.
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  • Social and environmental risks
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My Annual Report

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