Environmental review

Goals to 2025

Goals to 2028

Global Sustainable Development Goals (SDGs)

Approach to environmental management

Key principles and obligations

Effective environmental management is a key factor of the Company’s long-term sustainability, impacting PhosAgro’s ability to set and achieve goals, be a socially responsible business, and balance its obligations to a wide range of stakeholders.

The key priorities set out in PhosAgro’s Environmental Policy are careful use of natural resources and reduction of the environmental footprint. PhosAgro understands that our environmental impact may potentially affect a wide range of stakeholders and has therefore carried out a comprehensive assessment of its operations to identify key areas of this impact, both direct and indirect, and map them against the UN Sustainable Development Goals.

We seek to ensure compliance with environmental regulations throughout the whole life cycle of a fertilizer, from our ore to the food on our end consumers’ plates. PhosAgro strives to produce fertilizers in a safe and eco-friendly manner, thus contributing to the sustainable agricultural development worldwide. Committed to continuous improvement, the Group keeps working to lessen the environmental impact of its production operations and across the value chain.

Environmental management

PhosAgro’s environmental management system embraces key management levels and all production stages, from development to product release. It also standardises requirements for production management at the Company’s facilities.

By implementing a consistent approach in line with international environmental standards, each subsidiary contributes greatly to its own and the Company’s environmental performance and sustainable development.

Treating the enterprise’s operations as a set of processes can boost its efficiency through optimising internal and external interactions, preventing critical excesses at all stages of production, continuously monitoring the quality of raw materials and measuring production parameters. Compliance with environmental standards is achieved by constantly measuring parameters, monitoring and automating production processes and conducting rapid assessments of the operating environment.

Compliance

Environmental compliance is key to running a responsible business.

PhosAgro’s environmental management practices ensure our compliance with the applicable environmental and nature conservation regulations. To that end, the Company has developed an internal and external control framework, which includes internal audit and external compliance reviews, a reporting system designed in accordance with legislative requirements, and a staff training system.

All our facilities that have an adverse environmental impact are included in dedicated state registers, with relevant categories assigned to them. PhosAgro has all necessary permits in place for each of these facilities.

Assessment, analysis, and monitoring

The Company continuously monitors the impact of its operations to ensure compliance with environmental regulations. At all stages of production, we take the following steps to evaluate our environmental performance: control atmospheric emissions at the source, monitor air quality near sanitary protection zones, monitor pollutants in waste-waters discharged into water bodies, keep records of areas used to store production and consumption waste for all of the Company’s assets, including the operations of contractors.

Monitoring is based on dedicated programmes in effect at each of the Company’s production assets. The results are submitted to local environmental monitoring authorities in the regions where the Company operates. In case of deviations from the standards, the Company develops corrective measures. The monitoring results are used as a basis for:

• investment decisions and financial planning;
• initiatives aimed at reducing the impact of production operations;
• assessing the achieved effects;
• identifying and controlling environmental issues, determining risks and opportunities, developing and implementing risk management and response activities.

Environmental risk management is subject to regular assessment by the Board of Directors. The assessment serves as a basis for updating risk factors and their descriptions, as well as for developing new risk management activities, bringing forward new initiatives, and introducing policies.

Engaging stakeholders in the planning process is an important part of the environmental management. Public hearings are a legitimate and effective mechanism for establishing dialogue with stakeholders using a discussion platform to express their opinions and make suggestions on the initiatives under consideration. This mechanism has a positive and constructive impact on the decision-making process. Engaging the general public and an array of stakeholders in discussion helps ensure that all points of view are considered.

Permits, certificates, and confirmation of compliance with international environmental standards

The Company’s production sites hold all necessary licences and permits related to environmental protection.

We pass audits in accordance with ISO 9001:2015, ISO 14001:2015, OHSAS 18001, and GMP+ to ascertain the efficiency of our product life-cycle management.

Our facilities have also put in place a procedure to manage internal environmental audits. Every year, they develop internal audit programmes taking into account the environmental significance of the reviewed processes, changes affecting the facility and previous audit outcomes. The audits provide input data for the management to analyse environmental management efficiency.

It is important to note that PhosAgro’s environmental management system, as well as internal and external audit processes coupled with performance monitoring and evaluation by the management help identify potential improvement areas by means of a dedicated procedure for taking corrective actions.

Products exported to EU customers have been registered pursuant to Regulation (EC) No. 1907/2006 concerning the Registration, Evaluation and Authorisation of Chemicals (REACH). The quality of mineral fertilizers produced by the Company is confirmed by state registration certificates, declarations of conformity, and safety data sheets. According to expert reviews, new fertilizer grades are effective and environmentally and toxicologically safe. The products are properly classified, labelled and packaged in accordance with Regulation (EC) No 1272/2008 (CLP Regulation).

Mineral fertilizers produced by Apatit are subject to mandatory state registration of agrochemicals by the Russian Ministry of Agriculture. All grades of Apatit’s mineral fertilizers registered in Russia passed a mandatory examination for compliance with toxicological and hygienic, biological, environmental, and sanitary and epidemiological standards. The examination was performed by experts of the F.F. Erisman Federal Research Centre of Hygiene, D.N. Pryanishnikov All-Russian Research Institute of Agrochemistry, Rosprirodnadzor and Lomonosov Moscow State University, and Rospotrebnadzor, respectively.

ISO 14001 certification of all production sites is scheduled for 2021.

The decrease in spending on environmental protection in 2020 is associated with the completion of a large-scale project to construct the in-pit crushing and conveying system of the Koashvinsky open pit in 2019. The project’s capital expenditures were included in the item “Investments in fixed assets aimed at environmental protection”. In addition, there are several major projects underway to be accounted for in subsequent periods.

In 2020, Apatit paid a fine for exceeding the dust generation rate at the beneficiation waste disposal facilities (tailing) of the Kirovsk branch.

In 2020, Apatit received legal claim from Balto-Arctic transregional department of Federal Service of Environmental management. The claim was under court proceeding during 2020.

Legislative and administrative framework

None of PhosAgro’s enterprises uses ozone-depleting substances in the production process. A small amount (not more than 250 kg/year) of carbon tetrachloride (CCl₄) is used in laboratory testing.

We do not undertake cross-border hazardous waste transportation and our production sites are not situated in protected areas. Hence, there are no significant restrictions on our operations.

Environmentally responsible procurement policy

Incoming quality control

The list of industrial and technical products subject to incoming control is made on a daily basis. For a chemical product, a document containing information on its environmental and toxicological safety is a safety data sheet.

Safety data sheets for chemical products are reviewed by professional experts and included in product specifications. They provide consumers with details on chemical products’ safe usage, storage, transportation, and utilisation, as well as their safe usage by households. Safety data sheets contain reliable information in an accessible and concise form, sufficient for the consumer to take necessary measures to ensure the protection of human health and safety in the workplace, as well as environmental protection throughout the entire life cycle of chemical products.

All supplies undergo quality testing. If needed, the Company may request third-party centres to perform sample testing within their scope of certification.

Additional checks

The Company’s experts perform additional checks and assessments of potential suppliers if required for a specific tender. They may include a request to confirm the availability of production capacities and technologies, staff qualifications, licences, certificates, including ISO ones, and technical audit reports. An executive responsible for environmental management recommends an appropriate solution with regard to environmental safety.

2020 highlights

Emissions into the atmosphere

PhosAgro’s emissions management system seeks to comply with national air pollution regulations, ensure air quality in sanitary protection areas near production sites, and upgrade the Company’s capacities using the best available techniques.

NO_X, SO_X, and other significant air emissions, t

CHEREPOVETS SITE OF APATIT (Vologda region)

Greenhouse gases

Environmental protection, including climate related matters, and efficient use of resources are among the Company’s strategic priorities. The Group is committed to tackling greenhouse gas emissions and climate change. At PhosAgro, we work continuously towards accomplishing these objectives.

In 2020, as part of a project to scientifically verify and prioritise the UN SDGs, we added SDG 13 Climate Action to the list of priority goals the Company will be contributing to.

The responsibility to consider and make decisions on climate action has been vested with the Environmental, Health and Safety Committee, chaired by a member of the Company’s Board of Directors, an Executive Director. The committee’s climate functions include monitoring greenhouse gas emissions, as well as developing and implementing projects to reduce greenhouse gas emissions, including initiatives to improve energy efficiency at PhosAgro’s production facilities.

Scope 1 GHG emissions per tonne of output have been decreasing. Total Scope 1 and 2 GHG emissions have been rising due to production growth.

Climate Strategy

PhosAgro’s Climate Strategy was developed in 2020 and approved by the Company’s Board of Directors. It provides an analysis of climate scenarios in line with the Task Force on Climate-related Financial Disclosures (TCFD), identifies climate risks and opportunities, sets scientifically verified targets for GHG emissions, and outlines measures to achieve them – a low carbon transition plan.

The Strategy also includes provisions for interacting with participants in the Company’s value chain, including a supplier engagement concept. The main purpose of the interaction provisions is to manage GHG emissions across the value chain by providing relevant data that will allow the Company to regulate internal corporate processes and activities and guide suppliers and consumers on reducing GHG emissions.

As part of its priorities, PhosAgro’s Climate Strategy seeks to

GHG emissions by production site (DIRECT), SCOPE 1

Waste

Waste management is an integral part of PhosAgro’s comprehensive environmental management system.

Action taken to achieve waste management targets

The Cherepovets site is upgrading its aluminium fluoride plant, with its capacity to be expanded to 70 ktpa, to ensure the use of all the fluorine extracted as part of phosphate rock processing, reduce lime consumption in treating effluents, and decrease the generation and disposal of fluorine-containing waste.

Based on the safety requirements for hydraulic structures approved by the Federal Service for Environmental, Technological and Nuclear Oversight (Rostekhnadzor) in 2018, the Company’s tailings have the highest safety level. This means that they fully meet the design requirements and applicable rules and regulations. The state of structures and foundations corresponds to the requirements. The tailings are operated in accordance with industrial safety laws and regulations as well as instructions of supervisory bodies.

Waste by type and disposal method

Water

Water strategy

In 2020, PhosAgro developed a Water Strategy to improve its water management.

Its main objectives are as follows

We optimise our own production processes and try to reclaim water without having to draw more and discharge treated waste water. Two plants, in Volkhov and Balakovo, have implemented arrangements that basically exclude the discharge of treated industrial waste water into surface water bodies. All water from the production cycle passes through a multi-stage treatment system and returns into production.

The Water Strategy contains a list of projects for each branch, including the following investment programmes:

• Water efficiency improvement at Apatit (Vologda Region) during production upgrade in 2020–2025;
• Reduction of discharge volumes and improvement of waste water quality at the Kirovsk branch of Apatit in 2019 and beyond;
• Creation of a closed water circulation system at the Volkhov branch of Apatit (elimination of waste water discharge into the Volkhov River)

These activities have been consolidated into a single schedule

Biodiversity protection

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Before building any new production facilities or renovating existing ones, PhosAgro conducts an environmental impact assessment (EIA) based on the results of engineering and environmental surveys that provide deep insights into the local flora, fauna and landscapes. EIAs help identify all potential environmental and public health impacts of business or other projects, determine the respective risk levels and assess their adverse economic and social effects. If needed, a plan can be developed to mitigate these risks. EIAs also offer a look into public attitudes to matters like protecting biodiversity, with the findings incorporated later in the decision-making.

In early 2021, PhosAgro’s Environmental Policy was amended to set forth the Company’s obligations to preserve biodiversity, natural landscapes and habitats across its footprint and prevent its projects from causing any harm to the same.

Since 2020, with research institutions engaged, we have also been working on a programme that will establish our priorities in protecting biodiversity based on indicator species monitoring and help us check and restore the ecosystem health across our footprint.

The document, which we expect to submit to the Sustainable Development Committee in late 2021, will include a programme we adopted a few years ago to promote reproduction of aquatic biological resources.

Asset	Species	Quantity	Water body
Apatit (Vologda region)	Juvenile carp	6,500	Gorky Reservoir
	Pike larvae	654,400	Rybinsk Reservoir
Balakovo branch	Juvenile carp	25,000	Volgograd Reservoir
	Juvenile silver carp	20,000	Volgograd Reservoir
	Juvenile silver carp	440	Volgograd Reservoir
	Sterlet year ling	471	Volgograd Reservoir
	Juvenile carp	26,393	Saratov Reservoir
Volkhov branch	Char	2,116	Lake Ladoga
Kirovsk branch	Juvenile Atlantic salmon	4,000	Umba River
Total		739,320

Asset	Species	Quantity	Water body
Apatit (Vologda region)	Juvenile carp	6,500	Gorky Reservoir
Balakovo branch	Juvenile carp	30,000	Volgograd Reservoir
	Juvenile silver carp	25,000	Volgograd Reservoir
Kirovsk branch	Sterlet year ling	84,353	Sukhona River
	Juvenile Atlantic salmon (2 yrs)	2,130	Umba River
Total		147,983

Asset	Species	Quantity	Water body
Apatit (Vologda region)	Juvenile carp	6,500	Gorky Reservoir
Balakovo branch	Juvenile carp	45,000	Volgograd Reservoir
	Juvenile silver carp	45,000	Volgograd Reservoir
	Juvenile carp	16,620	Saratov Reservoir
	Juvenile silver carp	10,140	Saratov Reservoir
Metachem	Juvenile whitefish	2,276	Volkhov River
Kirovsk branch	Juvenile Atlantic salmon	5,000	Umba River
Total		130,536

Key activities in 2020

• PhosAgro takes part in the Carbon Disclosure Project (CDP) to reduce greenhouse gas emissions. PhosAgro published its climate reporting for the second time. As a result, the Company’s CDP rating was raised from C to B- (on an A–F scale, where A is the best possible score). The improvement is associated with work on the implementation of the Company’s climate strategy, which includes development and analysis of climate scenarios, a climate risk assessment, emissions reduction targets and a low-carbon transition plan, as well as improved non-financial disclosure.
• Another project included developing and deploying a technology allowing for the use of phosphogypsum (phosphoric acid production by-product) in road construction. In June, IFA included this project in the Phosphogypsum: Leadership, Innovation, Partnership report as an innovative practice in waste by-product management illustrating transition to a circular economy.

Key projects

• The Company delivered on its commitment to install and launch a fixed station for air quality control, the first facility of its kind in Volkhov and the Leningrad region. The station assesses air quality in the ground layer of the atmosphere against permissible concentrations and informs local residents accordingly via the website of the Volkhov municipal district administration. The site for the station was selected following public discussions and approved by the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing (Rospotrebnadzor) in the Leningrad region.

Energy efficiency

Developing energy efficiency management system in 2020

In the reporting period, the Company’s Board of Directors approved the Climate Strategy, with its key elements made part of the Company’s Corporate Strategy to 2025 (Strategy to 2025).

An important milestone was the approval of Apatit’s Energy Efficiency and Energy Saving Policy. The Policy sets out the following key goals:

• continuously improving energy efficiency;
• using energy resources in a sustainable and efficient manner;
• streamlining the energy management process for all types of operating activities.

To implement the provisions of Strategy 2025 and obligations listed in Apatit’s Energy Efficiency and Energy Saving Policy, in August the Board of Directors’ Sustainable Development Committee approved a unified Energy Efficiency Programme in addition to existing energy efficiency programmes at each of the Company’s four production sites. The Programme comprises over 20 measures to develop the following aspects.

The initiative timelines range from several months to two years and are regularly monitored by the Board of Directors’ Sustainable Development Committee. The Energy Efficiency Programme is open to updates and additions, with new proposals considered on an ongoing basis.

The Programme’s implementation is reviewed by the Board of Directors once every six months. Since the Company has approved and carried out a number of initiatives expected to deliver strong results, this will have a positive effect on energy consumption in 2021.

The activities of the Energy Efficiency Program are aimed at developing the following areas:

in-house power generation through utilisation of sulphuric acid production steam;

increase of the share of renewable energy sources;

introduction of technologies aimed at loss reduction and energy savings (e.g. LED lighting, frequency converters, less heat energy losses).

Key initiatives of the Energy Efficiency Programme for 2020–2021

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Project	Details and effect	Spending, RUB mln	Completion
Implemented in 2020
Cherepovets Construction of the SK 3300 plant at the phosphate facility of Apatit	SK 3300 generates steam in the amount of 175 t/h for the thermal power station. With the power generation remaining unchanged (no installed capacity added), this helps reduce natural gas consumption by some 135 mln m3 per year	10,500.0	2020
Balakovo Installation of the 45kW+ solar power station at Apatit’s Balakovo branch (Phase 1)	Solar power station pilot running at two production sites of the Company is geared towards assessing the potential of solar energy and the viability of a further scale-up	4.5 (Phases 1 the 25kW and 2 the 20kW in total)	2020
2021 target
Balakovo Installation of the 45kW+ solar power station at Apatit’s Balakovo branch (Phase 2)	Phase 2 of the project to replace third-party electricity supply with an alternative energy source (solar panel).	4.5 (Phases 1 and 2 in total)	Q2
Volkhov Construction of a thermal power station with a 34 MW high-efficiency electric turbine and a water treatment system at Apatit’s Volkhov branch	Project seeks to cut electricity costs through the utilisation of process steam from the new sulphuric acid plant at the thermal power station of Apatit’s Volhov branch, with the objective of providing all of the site’s consumers with low-grade steam. This will also significantly reduce the need to purchase electricity from third-party power suppliers	3,000.0	Q4
Volkhov Upgrade of the lighting system at the granulated sulphur warehouse, LED lights installation	Energy savings due to replacing mercury lamps with LED ones	1.5	Q2
Kirovsk Upgrade of the lighting system to LED at ANBP-2 of Apatit’s Kirovsk branch	A 0.5 MW reduction in annual energy consumption, lower maintenance and repair costs	42.0	Q4
Cherepovets Transfer by river water between c. 911 and 901 for boiler blowdown tank cooling	Reduced water consumption, cost cutting	0.5	Q4

Energy efficiency metrics

In 2020, the Company’s production facilities were 39.8% self-sufficient in terms of electricity needs, which is 0.4% less than in 2019. In absolute terms, the electricity generated by PhosAgro went up by 22 mln kWh year-on-year (the increase in total electricity consumption in 2020 was 89 mln kWh, with the new facilities commissioned). In 2021, the share of electricity generated in-house is likely to increase due to the planned launch of the 34 MW thermal power station at the Volkhov branch.

Asset	In-house electricity generation, mln kWh	Electricity generated through utilisation of sulphuric acid production steam
		mln kWh	%
Apatit (Vologda region)	1,167.0	534.2	45.8
Balakovo branch	355.1	346.2	97.5

Initiatives 2020

PhosAgro launched a project to use renewable energy sources at its production and social facilities, with the Izumrud corporate health resort in Balakovo becoming a pilot site. The first 25 kW solar power plant was installed on the roof of the resort’s medical treatment building. The spring of 2021 will see similar panels installed on Izumrud’s hotel building, resulting in a total capacity of 45 kW. It is also planned to test the technology at the Company’s chemical facility in Balakovo to assess the viability of a further scale-up.

Apatit’s Kirov branch signed a contract with TGC-1 to purchase electricity generated by hydroelectric power plants. As at January 2021, the amount of green energy supplied stood at 100 MW, which covers over 60 % of the plant’s output. Entering into a power supply contract with TGC-1 is yet another step toward achieving our goal to reduce GHG emissions (Scope 2). This will help diminish the carbon footprint and make our products more attractive for international customers.

The Group’s facilities widely use LED lighting, which has made it possible to cut lighting costs by 2–2.5 times. The lighting system of Apatit’s apatite-nepheline beneficiation plant (ANBP-3) was upgraded to LED in 2019, and a similar project will be implemented at ANBP-2 in 2021. These initiatives serve to reduce GHG emissions and, consequently, the carbon footprint of the Company’s finished products.

	Unit	Total for production assets
		2018	2019	2020
Electricity
Purchased electricity	mln kWh	2,165.56	2,234.57	2,300.77
Purchased electricity (per unit)	ths kWh/t	0.071	0.069	0.068
Produced electricity (non-renewables)	mln kWh	1,485.00	1,500.11	1,519.00
Produced electricity (non-renewables), per unit	ths kWh/t	0.048	0.046	0.045
Internal use electricity	mln kWh	3,650.57	3,734.68	3,819.77
Internal use electricity (per unit)	ths kWh/t	0.119	0.115	0.113
Electricity cost	RUB bln	8.919	10.286	10.418
Heat energy
Produced by TPPs	ths Gcal	2,847.59	2,742.82	2,435.44
Produced by boilers (steam)	ths Gcal	1,055.83	1,121.49	1,030.34
Purchased (in hot water)	ths Gcal	388.07	406.60	374.54
Sold (in hot water)	ths Gcal	178.01	155.46	200.78
Exhaust steam	ths Gcal	6,854.24	7,215.41	8,091.16
Internal use heat energy	ths Gcal	10,967.71	11,330.87	11,730.70
Internal use heat energy (per unit)	ths Gcal/t	0.357	0.349	0.347
Heat energy cost	RUB bln	10.009	10.748	10.491
Natural gas
Natural gas for production purposes	mln m3	2,667.47	2,704.24	2,699.88
Natural gas consumption (per unit)	ths m3 / t	0.087	0.083	0.079
Natural gas cost	RUB bln	11.467	12.058	12.413
LNG
LNG consumption	t	2,704.60	3,134.80	2,273.40
LNG cost	RUB bln	0.076	0.091	0.069
Fuel oil
Fuel oil consumption	t	147,976.68	154,132.80	146,785.80
Fuel oil cost	RUB bln	2.200	2.538	1.551
Heating oil
Heating oil consumption	t	697.43	703.30	725.50
Heating oil cost	RUB bln	0.004	0.004	0.004
Diesel fuel
Diesel fuel consumption	thou t	40,343.58	40,071.98	53,054.25
Diesel fuel cost	RUB bln	1.769	2.100	2.268