SUPPLY
CHAIN

GRI 3‑3

PhosAgro’s procurement system seeks to ensure that the Group’s subsidiaries receive the required resources, materials, and services of adequate quality, in full and at reasonable prices. However, there is much more to the principles and business processes underlying our procurement activities. We believe that running a supply chain in an efficient and responsible manner is the cornerstone of the Company’s sustainable development.

Thousands of our suppliers and contractors benefit directly from these investments, and so do their employees, who have to provide for their families.

We contribute to the public budget at various levels. What is even more important is that the tools we use – such as our environmental and social assessments of suppliers, along with anti‑corruption mechanisms – directly promote values of sustainability and social responsibility across the Russian business community. These values are the bedrock of our business philosophy.

GRI 3‑3

Our supply chain represents a set of interconnected processes covering all stages of value creation, from procurement to product delivery. The Group’s supply chain management focuses on ensuring the achievement of production targets via timely, complete, and high‑quality procurement, as well as boosting the Company’s efficiency.

Legitimate, competitive, and transparent procurement is among our key principles. In our relationships with competitors, we rely on mutual respect and avoid using unethical methods to gain a competitive advantage. The Company ensures compliance with Russian and other applicable anti‑monopoly laws in its operations.

KPIs are individual, and their calculation accounts for the personal contribution of each employee. Clear KPIs enable employees to understand what kind of performance is expected, and motivate them to work more productively. Ongoing monitoring of KPIs helps identify process vulnerabilities, make sound decisions while minimising risks, which results in higher effectiveness, better performance, and enhanced procurement strategy.

Continuous business process development and improvement underpins successful operation of the Company on the whole and of the Procurement Department in particular. We never stop learning and adopting best practices. PhosAgro Group strives to use modern tools to boost its business efficiency and ensure maximum transparency of its key processes.

The Group’s potential suppliers can participate in a fully transparent and accessible procurement procedure using the Company’s electronic bidding platform.

The Group’s potential suppliers can participate in a fully transparent and accessible procurement procedure using the Company’s electronic bidding platform.

Committed to fighting corruption, the Company adheres to the Anti‑Corruption Charter of the Russian Business. At PhosAgro Group, we establish and maintain business relationships with partners that operate in a bona fide manner, care about their own reputation, show commitment to high ethical standards, combat corruption, and take part in joint anti‑corruption initiatives in accordance with Article 13.3 of the Federal Law On Combating Corruption.

The Company expects its counterparties to report in good faith any concerns related to its activities.

As a way to ensure prompt response to suspected corruption and fraud, in 2016, PhosAgro launched a Group‑wide hotline for the management to better handle all reports of violations and issues, including those related to procurement. PhosAgro Group’s hotline is available to everyone, including the Company’s contractors and partners.

The hotline regulations can be found here.

PhosAgro Group places special emphasis on strengthening its supply chain in response to global geopolitical tensions. Adaptation to new technologies, changes in trade policies, and tightening sustainability requirements are presenting both new challenges for the Company.

We continued closer and more efficient collaboration with Russian manufacturers, with a variety of trials held and agreements signed for long‑term cooperation and fine‑tuning of equipment (including sludge pumps, filter materials, circulators and mixers, spare parts for main process equipment, self‑propelled underground machinery, and automation and control equipment) to meet the needs of Apatit.

Procurement highlights in 2024

Performance improvement

Local supplier management

GRI 204‑1

PhosAgro is also collaborating with local enterprises by organising Supplier Days and taking part in forums and other initiatives run by the Urban Development Agency in Cherepovets as well as the regional office of the Russian Union of Industrialists and Entrepreneurs in the Vologda region (e.g. VII International Industrial Forum).

In May 2024, an offline meeting was held between representatives of SMEs in Cherepovets and Apatit employees. The meeting was also live‑streamed for the general public. A total of 77 representatives of local suppliers and contractors attended the event, while the additional 677 participants joined online. Such hybrid meetings enhance collaborative processes, expand cooperation opportunities, and foster effective win‑win partnerships, allowing each party to identify the best work strategies for themselves and their partners. The participants received a tutorial deck covering the matters discussed during the meeting.

PhosAgro Group is actively introducing sustainability principles across its operations. The Company has an automated system in place to evaluate suppliers on the basis of ESG criteria, which results in an individual rating of each counterparty. This enables us to assess our suppliers’ environmental, social, and governance performance paying special attention to supplier engagement. To ensure reliability and predictability of cooperation, the Company runs technical supplier audits, including requirements as to their environmental and social footprint. In 2024, we held 58 technical audits of Russian manufacturers, resulting in partnerships with six of them ultimately declined.

PhosAgro Group’s suppliers play an important role in advancing the Company’s sustainability strategy, helping foster a more eco‑friendly, socially responsible, and economically stable future.

Key ESG evaluation indicators

Supplier environmental assessment

GRI 308‑1, 308‑2

Environmental standards observed by PhosAgro Group’s suppliers include the use of environmentally sound technologies, reduction of GHG emissions, and sustainable use of natural resources. This approach helps minimise a environmental footprint and maintain ecosystems. In 2024, suppliers with an environmental management system certified to ISO 14001 or a similar standard represented 34% of the rated producers of raw materials, fuel, energy, and commodities, while the overall number of suppliers went up year‑on‑year.

Supplier social assessment

GRI 414‑1, 414‑2

The social assessment of the Company’s suppliers takes into account such factors as working conditions, human rights, and corporate social responsibility. The analysis of changes in ESG evaluation items shows that most of the Group’s partner companies seek to operate in compliance with the labour laws and recognised safety standards.