Plekhanov Russian Academy of Economics, Moscow, Russia:

N. A. Kazakova, Professor, Doctor of Economic Sciences, axd_audit@mail.ru
A. L. Gendon, Associate Professor, Candidate of Engineering Sciences
E. A. Khlevnaya, Associate Professor, Candidate of Economic Sciences
N. V. Sedova, Associate Professor, Doctor of Economic Sciences

The international market of the mining and chemical industry is one of the best-consolidated and competitive economic environments. The competition is to a certain degree deterred by the limited access to raw material for production of fertilizers and by the high barriers to entry and exit the industry. Russian mining and chemical industry has currently operating four large vertically integrated holdings that supply the market in Russia and covers 10% of the international demand for mineral fertilizers. Up to 90% of fertilizer products manufactured in Russia go to export. The prospects for the mining and chemical industry are conditioned by its competitive advantages and trends in the global market of mineral fertilizers, in particular, in the developing countries in Asia and Latin America. Predictions of the advance in the industry are based on the strategic background such as the towering demand for agricultural products connected with the increase in population; reduction of land dedicated to agricultural production; insufficient yield of cereal crops; growth of GDP per capita in developing countries; upswing of demand for renewable sources of energy (bio fuel). At the same time, according to forecasts made by International Fertilizers Industry Association (IFA), the near-term outlook will be faced with the slowdown in the annual increment in consumption of mineral fertilizers in the world due to the drop in the effectual demand of the key consumers – agricultural producers. In the short term, all segments of the mining and chemical industry will suffer an excessive supply due to the dynamic increase in production capacities and in output that surpasses the planned consumption. The stepping-up of production of fertilizers can be predicted in such countries as China, India, Saudi Arabia, Brazil and Russia where intensification in agricultural production and, thus, the crop yield is much lower than in the mature economies. Russia’s largest producers, FosAgro and EuroChem, will continue sharing the market: EuroChem will supply 30% of production to China, India and Pakistan; FosAgro will deliver 25% of products to the countries of Latin America.

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