PJSC PhosAgro, Moscow, has asked the Russian authorities to adjust the parameters of the export duties implemented on fertilizers from Jan. 1, 2023, by reducing the price cut-off level, according to a Jan. 19 Interfax report. The report cited an unnamed source familiar with the content of a letter sent by PhosAgro CEO Mikhail Rybnikov to Russian President Vladimir Putin at the end of December.
Russia introduced export duties on all types of mineral fertilizers from Jan. 1 this year, at a rate of 23.5% on products priced over $450/mt (GM Dec. 9, 2022). For fertilizers priced up to a maximum of $450/mt, the rate of duty is zero. The duties will remain in place through Dec. 31, 2023.
According to the report, citing the PhosAgro CEO, the current approach discriminates against “more technologically advanced, though less marginal” producers of phosphates and complex fertilizers.
According to the CEO, under the existing parameters, nitrogen and potash fertilizers are not subject to the export duties, as their prices at the beginning of 2023 had fallen below the cut-off price of $450/mt.
Rybnikov believes – according to the report – that the duty parameters were approved without accounting for aspects such as the processing yield and the production profitability of various types of fertilizers.
Furthermore, he believes the duty levy will have “a minimal impact on the profitability of potash and nitrogen fertilizer production, which is 40%-60%, while the production profitability of phosphates and complex fertilizers will decrease to around 10%, which would lead to lower investment going forward,” according to the PhosAgro appeal, as cited by the report.
The Russian fertilizer group consequently has asked for the use of “the most transparent processes in order to determine the acceptable level of profitability in excess of operating costs as the baseline parameter for the withdrawal of excess profits.”
Putin has instructed the Russian government to consider PhosAgro’s appeal, according to the report, citing the source. PhosAgro declined to comment.