Supply chain
PhosAgro strives to make its procurement activities transparent and ensure fair competition and equal conditions for all suppliers of equipment and services. We seek to build strong, trustful and mutually beneficial relationships with our partners in compliance with the applicable laws, regulations, industry standards, contractual and other obligations.
Global Sustainable Development Goals (SDGs)
Procurement principles
As set out in the relevant policy of Apatit, the Company’s procurement activities should rely on the following principles:
- be legitimate, competitive, and transparent;
- factor in the requirements for specifications, quality, customer service, delivery, reliability, eco-friendliness and total cost of equipment and materials ownership, along with legal and social matters;
- use the best-fitting, sustainable business solutions;
- protect the Company’s reputation;
- comply with the Company’s existing procedures and best practices.
Procurement methods
Corporate procurement is a competitive process, with a dedicated commission put in charge of organising tenders for equipment, materials, petroleum products and services.
PhosAgro requests are placed on the Group’s electronic bidding platform (EBP) that meets all applicable requirements set by Russian law.
Key requirements for purchased products
When purchasing raw materials, components, packaging, the Company implements a pre-supply evaluation based on verification tests conducted by the Company’s quality control department subject to a report (approval) providing full information about the purchased items.
Suppliers are evaluated and selected in accordance with the Company’s standard STO 7.4-01 outlining the supplier reliability criteria.
As a socially and environmentally responsible business, the Company checks its potential suppliers for compliance with relevant requirements.
In line with PhosAgro’s Code of Ethics, the Company may refuse to cooperate with suppliers or business partners discriminating their own or subcontractors’ employees or using forced labour.
Committed to fighting corruption, PhosAgro adheres to the Anti-Corruption Charter of the Russian Business. We are making reasonable efforts to minimise risks of doing business with partners that might be involved in fraud and/or corruption.
In furtherance of our Anti-Corruption Policy, we establish and maintain business relationships with companies that operate in a bona fide manner, care about their own reputation, show commitment to high ethical standards, combat corruption, and take part in joint anti-corruption initiatives in accordance with article 133 of the Federal Law On Combating Corruption.
Transparency and openness of procurement processes
The Procurement Department, as the Company’s other departments, is committed to sustainable development. We bear responsibility not only for what we do but also for what our partner companies, suppliers and service providers do to comply with the sustainability principles. On top of that, we seek to have an entirely sustainable supply chain and adopt the relevant principles across the board to implement a green procurement system.
Pillars of our green procurement system
Creating a sustainable corporate framework for ESG based on internal regulations
Considering suppliers and contractors as vital participants in the Company’s value chain as part of our commitment to the UN Sustainable Development Goals
Covering all aspects of ESG-related activities in the Company’s non-financial disclosures
Discussing supplier and contractor relationships with stakeholders
Focusing the ESG ratings on corporate responsibility, including the value chains and supplier and contractor relationships
Green procurement activities
Highlights of 2020
Action plan for 2021
Code of Conduct for Counterparties
The Code of Conduct for Counterparties only deals with the sustainability-related aspects of counterparty relationships. It seeks to give a clear understanding of our approach to selecting suppliers and partners, along with our priorities in making the choice.
Based on the Code of Conduct for Counterparties, PhosAgro developed a system to evaluate suppliers against ESG criteria that cover environmental issues, social responsibility and quality management.
Code of Conduct for Counterparties
Legal compliance
Internal control and monitoring
Conflict of interest
Fair competition
Safe working environment
Requirements for salary and working time
Equal employment opportunity
Inside information
Freedom of association
Human trafficking and slavery
Confidentiality and data protection
Countering corruption
Confirming consent to this Code’s provisions>
Whistleblowing and safety guarantees
Occupational health and safety
Minimising environmental impact
The evaluation results in an individual supplier/contractor rating (in points). These ratings help us determine the share of ESG-compliant suppliers and contractors and make the right choice.
Human resources
Training
36 webinars, training sessions, workshops were held for the Department’s employees
2 people completed an EMBA course
Recruitment
The COVID-19 pandemic triggered fundamental changes to our recruitment approach. Previously, we used to source candidates locally, but the health emergency forced us to take a different route. This resulted in new opportunities, making the search not restricted to the regions we are based in and the candidate’s expertise and business competencies the first consideration. Attracting talent from large and global companies also proved beneficial.
| Tenders | Unit of measurement | JSC Apatit | Balakovo branch | Volkhov branch | Kirovsk branch | Total |
|---|---|---|---|---|---|---|
| Capital construction | Procedures | 73 | 33 | 27 | 109 | 242 |
| RUB mln | 4,017 | 307 | 1,430 | 4,368 | 10,122 | |
| Maintenance and repairs | Procedures | 54 | 42 | 43 | 44 | 183 |
| RUB mln | 711 | 97 | 300 | 339 | 1,447 | |
| Transportation, incl. rail | Procedures | 52 | 3 | 2 | 12 | 69 |
| RUB mln | 3,930 | 0.5 | 209 | 1,568 | 5,707.5 | |
| Corporate and other services | Procedures | 49 | 15 | 15 | 22 | 101 |
| RUB mln | 1,261 | 188 | 201 | 122 | 1,772 | |
| Total | Procedures | 228 | 93 | 87 | 187 | 595 |
| RUB mln | 9,919 | 593 | 2,140 | 6,397 | 19,049 |
| Asset | Local businesses | Other businesses | Total |
|---|---|---|---|
| JSC Apatit | 15,067,520 | 41,456,426 | 56,523,946 |
| Balakovo branch | 1,875,152 | 7,133,525 | 9,008,677 |
| Volkhov branch | 3,346,186 | 6,287,501 | 9,633,687 |
| Kirovsk branch | 3,178,357 | 25,724,637 | 28,902,995 |
| Total | 23,467,216 | 80,602,090 | 104,069,306 |
| Asset | Foreign | Domestic | Total |
|---|---|---|---|
| JSC Apatit | 1,113,600 | 55,410,347 | 56,523,946 |
| Balakovo branch | 22,995 | 8,985,683 | 9,008,677 |
| Volkhov branch | 242,552 | 9,391,136 | 9,633,687 |
| Kirovsk branch | 1,499,352 | 27,403,642 | 28,902,995 |
| Total | 2,878,498 | 101,190,808 | 104,069,306 |
| Asset | Other businesses | SMEs |
|---|---|---|
| JSC Apatit | 48,140,395 | 8,383,552 |
| Balakovo branch | 6,636,792 | 2,371,885 |
| Volkhov branch | 7,005,262 | 2,628,426 |
| Kirovsk branch | 22,083,140 | 6,819,855 |
| Total | 83,865,589 | 20,203,717 |
Our supply chain represents a set of interconnected processes covering all stages of value creation, from procurement to product delivery. At PhosAgro, supply chain management aims to ensure smooth operation of all facilities, high product quality, and seamless shipments to customers.
Significant changes to PhosAgro and its supply chain
The reporting year saw some changes to PhosAgro’s supply chain.
Our ammonium sulphate and sulphuric acid projects brought about a significant decrease in external purchases and reduced our dependence on outside suppliers, which had a positive effect on purchase prices. In 2020, ammonium sulphate consumption grew by 23%, while its purchases sank by 42%. Sulphuric acid purchases were down by 31%.
In recent years, urea-formaldehyde concentrate (UFC) consumption has been on the rise as urea production grows. Between 2018 and 2020, urea production increased by 8%, driving UFC purchases up by 16%.