Which of Russian ports to accept new flows of mineral fertilizers expected in abundance?
Russia is still dependent on ports of neighboring countries in terms of handling mineral fertilizers as it lacks dedicated deep-water terminals. However, the situation can change radically in five years.
Mineral and chemical fertilizers is quite a promising cargo. While the situation in the oil and coal markets is difficult to predict in view of rapidly developing alternative energy technologies, the segment of mineral fertilizers is different. Long-term demand is stable here due to rapid growth of the world population and raising of living standards in dynamically developing densely-populated countries.
Nevertheless, Russia has not yet created port infrastructure required for exports of mineral fertilizers. According to IAA PortNews’ analytical center, exports of mineral fertilizers via ports totaled 29 million tonnes in 2019 with one third of them handled in the ports of neighboring (Baltic) countries.
The volumes flowing via domestic ports are primarily handled by non-dedicated terminals through involvement of a variety of schemes including containers. The latter is almost perfect but there's something making a difference: handling of considerable batches via multipurpose terminals is always less profitable when compared with exports via dedicated facilities, hence enormous flows to foreign ports.
In the first half of 2020, most of mineral fertilizers were shipped from the ports of the North-West Region: Big Port St. Petersburg (Baltic Bulk Terminal), Ust-Luga (European Sulfur Terminal, New Communal Technologies) and Murmansk (Murmansk Bulk Terminal).
Smaller volumes are exported via southern ports (Tuapse, Novorossiysk and others).
In the Far East, handling of mineral fertilizers is now close to zero (except for slight amount handled in Vladivostok).
This situation can be attributed to several factors. First of all, logistics of this cargo handling has been well-functioning in the Baltic states for decades. The development of dedicated facilities was supported by essential investments including those from Russia. Delivery of mineral fertilizers to the ports of the Far East is hindered by limited capacity of railway approaches loaded “to the brim” with coal. Meanwhile, efforts of Russian investors into port infrastructure were focused on handling of more widespread or profitable cargo such as liquid bulk cargo, coal and containers. Secondly, Russia has always featured tough standards for storing of mineral fertilizers (not closer than 500 meters to water). The State Duma is currently considering a bill on mitigation of those requirements.
The situation can change radically in five years. New projects on construction of dedicated terminal have been developed for all sea basins of Russia.
The most ambitious plans are for the Baltic Basin. Ultramar terminal is under construction in Ust-Luga. By launching the terminal’s first turn, its mooring line will be 295 meters, annual throughput - 5 million tonnes, turnover of vessels - 173. When fully operational, these parameters will be increased to 844.7 meters, 12 million tonnes and 426 calls accordingly. Construction of hydraulic engineering structures is underway there.
Another project in Ust-Luga is EuroChem terminal. Upon completion of all the three phases, the facility will be able to handled 6.025 million tonnes per year with the throughput expected to be as high as 5.55 million tonnes per year. The terminal has already obtained state expert approval from Glavgosexpertiza.
Primorsky Multipurpose Reloading Complex is also a large-scale project in the Leningrad Region. It foresees the construction of a terminal in the port of Primorsk with a total annual capacity of 70 million tonnes including 7 million tonnes of mineral fertilizers. The facility is to be included into the comprehensive plan for upgrading and expanding core infrastructure. The site development is underway.
In the Murmansk Region, the Liinahamari Port project foresees the construction of a multipurpose handling facility able to ship 4 million tonnes of mineral fertilizers per year. It has recently obtained the status of the Arctic Zone resident.
In the Southern Basin, we should mention the OTEKO’s project. It foresees handling of 5 million tonnes of mineral fertilizers at the Taman dry bulk cargo terminal. The terminal’s second phase is under construction (no handling of mineral fertilizers so far).
As for the Far East, Nakhodka Fertilizer Plant is planned for construction. The product of NFP is to be handled in Vostochny port with the volume of shipments being estimated today.
So, with at least some of the announced projects implemented by 2025, the transit of Russia’s mineral fertilizers via the foreign ports of the Baltic Sea will be minimized. However, local terminals will compete with each other amid the excess of facilities expected from 2025.