PhosAgro to lease from Gazprombank 500 new hoppers built by United Wagon Company for RUB 2.9 billion with purchase option

PhosAgro (Moscow Exchange, LSE: PHOR), one of the world’s leading vertically integrated phosphate-based fertilizer producers, announces that it has signed an agreement with Gazprombank Leasing, a leading Russian and European leasing company, to lease 500 next-generation hoppers for fertilizer transportation.

The agreement is worth RUB 2.9 billion, and has been signed for 10 years with a purchase option on the hoppers.

The hoppers will be delivered in January 2018 by Tikhvin Freight Car Building Plant, which won a tender to supply the hoppers and is part of United Wagon Company, a leading producer of next-generation freight cars in the CIS.

PhosAgro’s logistical assets currently have a fleet of more than 6,000 owned and leased cars to transport primarily apatite concentrate and fertilizers across Russia.

PhosAgro CEO Andrey Guryev said: “This transaction is designed to renew our fleet, given the increasing demands placed on it, and to strengthen our competitiveness both at home and in international markets. With leasing rates for vehicles of this type increasing, having new hoppers with expanded capacity will have a substantial economic effect, particularly given the increases in our urea production. According to our estimates this effect could be more than RUB 300 million.”

Increased capacity means the next-generation hoppers are able to transport greater volumes of fertilizers – an additional 7 million tonnes more than typical hoppers. Longer time between services (eight years or 800 thousand km) will reduce the cost of the hoppers’ life-cycle by more than two times.

PhosAgro has operated hoppers built by the Tikhvin Freight Car Building Plant and fitted with a running gear an increased axel load of 2 tonnes since 2013.

“Thanks to our high levels of knowledge and experience our company has been able to become a leader in the rail transport segment,” said Gazprombank Leasing CEO Maxim Agadzhanov. “We endeavour to embed ourselves as deeply as possible in our clients’ business and in addition to financing can provide expert support, arrange payment schedules and factor in all the subtleties of the market. I believe that this approach will help us maintain our market leadership going forward.”