PhosAgro signs agreement with TGC-1 during SPIEF 2021 to increase the use of green energy in its agrochemical production chain

Date:06-03-2021

During the 24th St. Petersburg International Economic Forum, PhosAgro signed agreement with TGC-1 to increase the use of green energy in its mineral fertilizer production chain.

Last December, PhosAgro's Board of Directors approved the Company's climate strategy. The main element of the strategy is to continue efforts to reduce greenhouse gas emissions, including indirect energy emissions generated during the production of electricity consumed by the Company's industrial facilities. At the heart of the climate strategy is a low-carbon transition plan.

PhosAgro's signing of an agreement with TGC-1 built on an agreement for the supply of electricity generated at TGC-1's hydroelectric power plants that the parties signed in January 2021. Some 323 million kWh will be supplied this year.

"PhosAgro and TGC-1 are linked by a long-term partnership. For decades, the cogeneration plants and hydroelectric power plants that are now part of TGC-1 have reliably provided our enterprises and the cities where we operate with heat and electricity. Our Apatit mining and processing plant and TGC-1's power plants in the Murmansk region were the first companies in the mining industry and in the GOELRO electrification plan, respectively, in the subarctic region.

"At the beginning of this year, we took our cooperation to a new level, having reserved for our Apatit plant supplies of green electricity from TGC-1 that will cover more than 20% of the plant's energy needs this year. And today we are agreeing on a significant increase in the consumption of green electricity from the TGC-1's hydroelectric power plants. I am confident that our cooperation with TGC-1, including by obtaining green certificates, will be long-term and productive", said Andrey Guryev, Chairman of the Management Board and the CEO of PhosAgro, during the signing ceremony.

"As the leading producer of electricity in the north-west and a company that is systematically developing the renewable energy sector, TGC-1 already offers existing and potential partners a genuine tool for reducing their carbon footprint and complying with environmental standards and climate obligations. Today's agreement is an important step in the development of long-term relations in Russia's emerging green energy market", said Vadim Vederchik, Managing Director of TGC-1.

PhosAgro Group has been aggressive in introducing energy-efficient and green technologies at its enterprises. In terms of energy, this involves the use of frequency converters at industrial facilities, which make it possible to reduce the power consumed by electric motors and to cut down on energy losses during the start-up of motors. A major energy-efficiency project is also under way to build a number of power plants operating on exhaust steam from sulphuric acid plants.

This project will enable the Company's production facilities in Cherepovets and Balakovo to generate 60%–80% of the energy they need. A power generating plant similar in terms of its operating principles is being designed and is currently being built in Volkhov as part of a large investment project. The use of exhaust steam from sulphuric acid production for the generation of energy is fully consistent with the best available technologies and enables the replacement of natural gas for power generation and, accordingly, a significant reduction in the carbon footprint.

In 2020, PhosAgro launched a project for the use of renewable sources of energy at its industrial and social facilities. The first test site was the Izumrud corporate sanatorium and hotel complex in Balakovo. The first solar power plant with a capacity of 25 kW was installed on the roof of the diagnostic and treatment facility at the sanatorium. In the spring of 2021, similar panels will be installed on the hotel at the Izumrud sanatorium, raising the system's total capacity to 45 kW. In addition, the Company plans to test the technology under factory conditions at its Balakovo chemical cluster.

Moreover, LED lighting is widely used at Group enterprises, which has made it possible to reduce lighting costs by 2x–2.5x and to reduce the carbon footprint of the Company's finished products. Last year, the apatite-nepheline concentration plant (ANOF) No. 3 switched to LED lighting, and a similar project will be carried out in 2021 at ANOF No. 2.

PhosAgro Group has received high marks from major global ESG ratings for its actions in the area of climate responsibility. In December 2020, for example, CDP, one of the largest and most authoritative studies in terms of corporate climate metrics, revised PhosAgro's rating upward from C to B-. In its annual review of ESG risk ratings, the influential international agency Sustainalytics raised PhosAgro's rating considerably – from 43.8 to 26.9 points (moderate risk) – ranking the Company among the top three enterprises in the global agrochemical industry.

At the end of April 2021, the international agency MSCI ESG Research upgraded the Company's sustainability rating from BBB to A, underlining PhosAgro's leading position among Russian companies and in the global fertilizer market.