EuroChem and ChemChina sign MOU for Russia’s first PU plant

Swiss fertiliser company EuroChem Group has signed an MOU with China National Chemical Corporation (ChemChina), the largest chemical corporation in China, for a potential partnership to jointly produce industrial products in Russia. Both companies agreed to form a working group to further evaluate the technical feasibility of the Project and will carry out due diligence.

EuroChem and ChemChina will consider jointly starting production of propylene oxide (propylene glycol and polyols) and isocyanate (MDI/TDI). The former has vast application across many industries, including for the development of synthetic lubricants, surfactants, and polyurethane products, with the latter mainly used for thermal insulation in construction. This will be the first production of its kind for Russia and the CIS which currently rely on imports from Germany, the Benelux countries, the US and Japan. Future output is expected to be sold predominantly in Russia to meet growing internal demand.

If it goes ahead, the project will be implemented at EuroChem’s Novomoskovskiy Azot plant in the Tula region, Russia. This will allow EuroChem to optimise current production capacity at this facility by integrating the additional downstream production process which will utilise existing by-products and infrastructure. ChemChina will deliver the necessary production technology.

Subject to preliminary estimates, the project may cost US$500 million and might also attract other potential investors, with the prospect of additional financing from Russia and China.

Dmitry Strezhnev, EuroChem CEO, commented: “We are looking forward to working with ChemChina. This mutually beneficial partnership would complement our existing production, whilst also ending Russia’s reliance on imports through this first production facility of propylene oxide and MDI/TDI in the country.”

Separately, EuroChem signed a MOU with the Russian federal and Tula regional authorities to conclude a trilateral special investment contract in support of this potential project in the Tula region. This MoU creates the necessary framework to aid implementation by establishing a favourable investment environment in the region. Both of the memorandums were signed at the St. Petersburg International Economic Forum.

EuroChem produces primarily nitrogen and phosphate fertilisers, as well as certain organic synthesis products and iron ore. The Group is vertically integrated with activities spanning mining and hydrocarbons extraction to fertiliser production, logistics, and distribution. EuroChem is currently developing two sizeable potash deposits in Russia with its VolgaKaliy and Usolskiy Potash greenfield projects. Headquartered in Zug, Switzerland, the group operates production facilities in Belgium, China, Kazakhstan, Lithuania, and Russia and employs more than 25,000 people globally.