Business environment

On 1 March 2022, the UK passed a bill fully blocking access to the nation’s ports for all vessels related to Russia. On 4 March 2022, Denmark’s Maersk stopped accepting bookings for the shipment of essential goods from the ports of Novorossiysk, St Petersburg and Kaliningrad.

The London Stock Exchange suspended trading in depositary receipts issued by Russian companies, including PhosAgro. According to the LSE, this move was designed to maintain orderly markets in light of the market conditions.

In February–March 2022, many Western suppliers of equipment and industrial solutions resolved to close shop in Russia. Among them were Caterpillar, Metso, Epiroc, Sandvik, Komatsu, Hitachi and others. The economic sanctions imposed by the USA and EU complicated exports of dump trucks from respective countries to Russia, while also contributing to the shortage of components (engines, gearboxes) and spare parts.

On 1 March 2022, the world’s three largest container shipping lines – Switzerland’s Mediterranean Shipping Company (MSC), Denmark’s Maersk and France’s CMA CGM – suspended cargo bookings from Russia.

The Office of Foreign Assets Control (OFAC) of the US Treasury published a new general licence, which removed Russian mineral fertilizers from possible sanctions. The US authorities classified Russian fertilizers as strategic supplies required to prevent shortages of chemical products essential for the agricultural industry.

The EU approved the fifth sanctions package
As part of its new sanctions package, the EU restricted imports of fertilizers from Russia. The restrictions do not apply to the execution until 10 July 2022 of contracts concluded before 9 April 2022. Starting from 10 July, the EU also introduced the following one-year quotas for Russian fertilizer imports: 837.57 kt for potassium chloride, and 1,577.8 kt for complex and other potassium-containing fertilizers.

The fifth sanctions package also imposes a ban on imports of potassium chloride from Belarus through Russia (“anti-circumvention measure against potash imports from Belarus”).

As part of its fifth package of sanctions against Russia, the EU closed off its ports for Russian-flagged vessels starting from 16 April 2022. The ban also applies to the vessels that changed their Russian flag or their registration after 24 February 2022.

The sanctions apply to a number of Russian companies, including PJSC Gazprom, PJSC NOVATEK, PJSC Acron, PJSC PhosAgro and others.

From April to June 2022, Russia shipped 350 kt of diammonium phosphate to India, thus becoming the largest supplier of phosphate fertilizers in the Indian market amid the sanctions imposed by Western countries.

The OFAC authorised transactions with Russia related to the supplies of agricultural commodities, fertilizers, medicines and medical devices.

The US International Trade Commission (ITC) recognised that imports of urea ammonium nitrate (UAN) solutions from Russia and Trinidad and Tobago did not hurt American producers. The investigation was launched in summer 2021 after a petition from CF Industries Holdings, the nation’s largest producer of said fertilizers.

The grain deal was signed on 22 July 2022. Russia and Ukraine entered into the grain export agreement separately by executing individual documents with Turkey and the United Nations. Furthermore, Russia and representatives of the United Nations Secretariat met in Istanbul on 22 July 2022 to sign a Memorandum of Understanding on promoting Russian food products and fertilizers to the world markets. On 17 November 2022, the grain deal was extended for a period of 120 days.

The European Commission issued an updated guidance to make it clear that EU companies are allowed to offer transportation and insurance support to Russian fertilizers transiting to third countries.

The US Departments of Treasury and State urged creditors to continue offering their key services (USD  settlements, payment transfers, trade financing, etc.) to Russian companies exempted from certain aspects of sanctions, for example, such companies as PJSC Gazprom and PJSC PhosAgro.

The UK Government issued a general licence that permits the provision of financial services for the supply of Russian fertilizers to third countries. The UK officials emphasised that the licence is only applicable to the shipments of fertilizers for agricultural needs.

Under the ninth sanctions package, certain EU member states were allowed to unfreeze the assets of Russian businessmen engaged in production of fertilizers and chemicals, if this was needed strictly to bankroll shipments of food and fertilizers.

Starting from 1 January 2023, Russia imposed export duties on all types of mineral fertilizers to be charged at a rate of 23.5% of the price above USD 450 per tonne.

On 1 January 2023, the New Common Agricultural Policy of the European Union came into effect. This Policy will be key to securing the future of EU’s agriculture and forestry, as well as achieving the objectives of the European Green Deal.

In January 2023, the Pan-African Parliament Bureau adopted a resolution on the impact of sanctions on food security in Africa. The resolution urges to create with an immediate effect a Fact-Finding Mission to assess the impact of current sanction-related fertilizer shortages and to address themselves to the relevant governments and institutions responsible for the shortages.