THE SOVIET FERTILIZER INDUSTRY: DEVELOPMENT IN THE 1970S AND OUTLOOK FOR THE 1980S

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T00658R000200070002-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 43
• Document Creation Date: December 21, 2016
• Document Release Date: February 26, 2008
• Sequence Number: 2
• Publication Date: June 1, 1983
• Content Type: REPORT

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Directorate of Secret
Intelligence
'ir ?~ STER F
CO NOT MV E C T
OR MARK ON
The Soviet Fertilizer Industry:
Development in the 1970s
and Outlook for the 1980s
Secret
SOV 83-10089
June 1983
?y 464
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ff Directorate of Secret
lli
t
I
gence
n
e
The Soviet Fertilizer Industry:
Development in the 1970s
and Outlook for the 1980s
This paper was prepared b
Soviet Analysis.
Comments and queries are welcome and may be
directed to the Chief, Soviet Economy Division,
SOYA,
Secret
SOV 83-10089
June 1983
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The Soviet Fertilizer Industry:
Development in the 1970s
and Outlook for the 1980s
Key Judgments Aided by large imports of Western equipment and technology, the Soviet
Information available Union has become the world's leading fertilizer producer. Output of
as of 30 April 1983 fertilizer nutrients grew by a total of 90 percent during the 1970s. Nearly
was used in this report.
70 percent of this growth occurred before 1975, however.
The main causes of the growth slowdown during the 10th Five-Year Plan
(1976-80) were (a) lags in expanding capacity for supplying the raw
materials and intermediates used in the production of fertilizer and (b) the
underutilization of existing capacities at all stages of the production
process. Because these problems are continuing into the 1980s, the goal to
produce 36 million tons of nutrients in 1985 appears to be out of reach. We
estimate that the Soviets will produce approximately 30 million tons of
fertilizer nutrients in 1985, an increase of more than 20 percent over 1980.
One-half of the planned increase is to come from greater utilization of old
and new capacity.
This shortfall will put a sizable roadblock in front of the Soviet Union's
Food Program. Moscow has placed a high priority on increased use of
fertilizer to boost farm output. Applications on crops grew by two-thirds in
1971-75, exceeding the plan. But the marked shortfall in fertilizer
production in 1976-80 limited shipments to farms to less than 19 million
tons in 1980-a 9-percent increase over 1975 and 30 percent less than plan.
We judge that farm use in 1985 again will fall short of plan and probably
will be in the range of 23-24 million tons of nutrients. Such a shortfall
would require the Soviets to import 13-16 million tons of grain worth about
$1.5-2 billion at 1982 prices.
Despite the marked shortfall in domestic availability, fertilizer exports
have grown rapidly. Exports in 1980 totaled nearly 4 million tons of
nutrients, more than twice the level in 1970. Hard currency sales of nearly
$200 million accounted for one-fourth of the value with most of the rest ex-
ported to CEMA countries.
We estimate that the USSR will remain a net importer of grain and a net
exporter of fertilizer. Even though the relationship between world fertilizer
and grain prices argues for using fertilizer domestically, the Soviets have
chosen to continue to export. A variety of reasons may influence export pol-
icy in the face of these relative prices and the dire need to expand farm out-
put, including commitments to CEMA client states and Western countries,
continued lack of supporting infrastructure for distributing and storing
iii Secret
SOV 83-10089
June 1983
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fertilizers and a shortage of application equipment, the lack of sufficient
phosphate fertilizer to provide an appropriate balance with the available
nitrogen and potassium fertilizer, and the need for hard currency earnings.
Exports of nitrogen and potash fertilizer nutrients in 1985 could amount to
5-5.5 million tons, with sales for hard currency earnings of perhaps $200-
400 million in 1982 prices. The USSR is also the world's largest exporter of
ammonia-a key intermediate product. Shipments in 1980 amounted to
about 2.2 million tons-one-third of the world trade in this product. Most
of the ammonia exported is associated with buy-back deals for Western
equipment or with a fertilizer exchange agreement with a US firm. The
Soviets are already committed to export about 3.2 million tons of ammonia
in 1985 worth about $450 million in 1982 prices.
Shortages of high-quality phosphorus fertilizers will continue to be espe-
cially troublesome for Soviet planners. Over 55 percent of the arable land
in the USSR is seriously deficient in phosphorous, which is particularly
important for hastening the maturing of grain in areas that have short
growing seasons. Although the Soviets have large reserves of phosphate
raw materials, a shortage of high-quality reserves means that domestic
supplies probably will have to be supplemented by purchases on world
markets.
To support its massive fertilizer program, the USSR purchased $360
million worth of equipment from the West in the 1960s. Orders soared to
about $3 billion in 1971-80, one-third of the value of all chemical
equipment and technology ordered from the West. Despite the critical role
Western equipment and technology played in obtaining the large gains in
fertilizer output since 1960, Moscow has been disappointed by the returns
on the heavy hard currency outlays. The difficulties encountered in
assimilating these imports probably is one of the major arguments of those
within the Soviet Union who oppose increased reliance on Western
technology in the 1980s~
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Key Judgments
Introduction
Background
Investment and Western Technology
Rising Investment Costs
Role of Imported Equipment
3
The Fertilizer Industry in the 1970s
4
Production
4
Quality and Assortment
6
Why the Production Shortfall?
9
Project Completion
10
Underutilized Capacity
11
Equipment Problems
12
Labor Problems
13
3
1
Sulfuric Acid and Phosphate Raw Materials
13
Natural Gas
13
Nitric Acid
13
Transportation
14
Trade in Fertilizer and Feedstocks
14
Fertilizer
14
Exports of Fertilizer Feedstocks
15
Outlook for the 1980s
16
Raw Materials
16
Production Goals for 1985
16
Estimated Production in 1985
17
Progress to Date
18
Bottlenecks in Other Sectors
18
Deliveries to Agriculture
20
Trade Patterns
20
Future Purchases of Western Equipment
22
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B.
USSR: Contracts for Purchase of Fertilizer Equipment and
Technology From Non-Communist Countries, 1971-81
29
35
1.
USSR: Increase in Fertilizer Production Capacity and Output
3
4.
USSR: Fertilizer Production by Type
5.
USSR: Estimates of Fertilizer Plant Capacity Utilization
12
2.
USSR: Average Annual Rates of Growth of Productivity in the
Chemical Industry
8.
USSR: Estimated Fertilizer Production, Supply to Agriculture, and
Exports, 1985
18
A-1.
Soviet Fertilizer Industry: Increase in Production Related to
Commissioning of New Capacity
23
A-2.
USSR: Fertilizer Production and Deliveries to Agriculture
24
A-5.
USSR: Estimates of Capacity Utilization in the Fertilizer Industry
27
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The Soviet Fertilizer Industry:
Development in the 1970s
and Outlook for the 1980sF_
The Soviet Union is the world's largest producer of
chemical fertilizers, accounting for more than one-
fifth of global output.' Fertilizer is the single most
important factor in raising Soviet crop yields. The
Soviets claim that more than one-third of the coun-
try's gross agricultural product in 1976-80 was ob-
tained with the use of chemical fertilizers.
Determined to maintain the momentum in expanding
farm output achieved in the previous two decades, the
Soviets adopted plans for a continued rapid expansion
of fertilizer output in the 1970s and sought Western
help to carry out the program. This report reviews the
development of the Soviet fertilizer industry during
the 1970s, the causes for the marked slowdown of
growth since the mid-1970s, and the outlook for
fertilizer production, supplies, and exports in the
1980s. The contribution of Western equipment and
technology is also examined.
they need to meet targets for crop yields. In practice,
however, production and delivery bottlenecks have
meant that actual allocations rarely have been suffi-
cient to meet the plan for grain, even if precipitation is
adequate. Farm applications also have been limited by
serious losses in transport and storage and inadequate
supplies of application equipment (see inset and
table 1).
We have no information on the productivity of capital
and labor inputs to the Soviet fertilizer industry;
however, the Soviets do publish data on the chemical
industry as a whole (see table 2). After rising during
the first half of the 1970s, total factor productivity fell
in the last half of the decade and continued to fall
more steeply in the 1980s.
Analysis described in the remainder of this paper will
show that the situation in the fertilizer industry was
even worse. In particular, because the fertilizer indus-
try had more underutilized capacity on average than
the chemical industry as a whole, trends in capital and
labor productivity probably were more unfavorable.
Increased crop yields in the Soviet Union since 1960
have resulted mostly from increased use of fertilizers.
Prices for fertilizer and crops have been structured to
encourage fertilizer use in part by setting the state-
controlled prices charged farms for fertilizer below
production costs. A Western study indicates that in
the late 1970s roughly 37 percent of the cost of
fertilizers delivered to farms was covered by state
subsidies. Grain and other crop prices are set suffi-
ciently high that, on average, fertilizer use has been
extremely profitable.' Planned allocation of fertilizers
has been designed to provide farms with the amount
excludes organic fertilizer.
The financial incentive to fertilize wheat crops is relatively greater
in the USSR than in the United States. For example, the ratio of
wheat prices to fertilizer prices in recent years was 0.68 for the
USSR and 0.42 for the United States. Soviet experts estimated that
using mineral fertilizer during 1971-75 resulted in a return in
Rising Investment Costs
Development of the fertilizer industry has received
high priority since the mid-1960s. The share of total
chemical investments being channeled into fertilizer
plant and equipment increased from roughly 30 per-
cent in 1966-70 to nearly three-fifths by 1980.' The
' The Soviet Union publishes statistics annually on its expenditures
for gross new fixed capital investment. The data are expressed in
1973 prices and include expenditures on imported machinery and
equipment. We are uncertain, however, how the Soviets convert the
cost of their machinery imports into the 1973 ruble price base used
to construct the published investment statistics. Western analysis
suggests that imported machinery is valued in domestic prices by
means of conversion coefficients. During 1972-78 these conversion
coefficients were approximately one; that is, "external rubles" were
simply translated into "domestic rubles" without adjustments. We
do not know whether the data are then converted to a 1973 price
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Soviet chemical fertilizers are divided into three
main groups: nitrogen, phosphate, and potassium
(potash). Multinutrient or complex fertilizers contain
two or three of these main elements and sometimes
trace elements or microelements. Ammonia, more
than 90 percent of which is obtained from natural
gas, is the key intermediate in the production of
nitrogen fertilizers. Ammonium nitrate (34 percent
nitrogen) and urea (46 percent nitrogen) are the major
types of nitrogen fertilizer produced in the USSR.
Phosphate fertilizers such as single and triple super-
phosphate are produced by treating phosphate rock-
apatite or phosphorite-with sulfuric and phosphoric
acid. Phosphate rock also is applied directly in the
form of ground phosphorite meal. Potash fertilizers
are based mainly on the potassium salts, sylvinite
and kainite. Most of the potash fertilizers produced
in the USSR are in the form of potassium chloride.
Complex fertilizers include: (1) compound fertilizers,
which are produced as chemical compounds in a
unified production process such as ammofos
(monoammonium phosphate),a nitroammofoska, and
nitroammofos, and (2) mixed fertilizers, which are
physical mixtures of simple fertilizers.
Fertilizer output is expressed in (a) standard units (a
Soviet statistical concept), (b) 100-percent nutrients
(N, P2O3, K,O), and (c) physical weight. Under the
standard unit concept, nitrogen fertilizer contains
20.5 percent N; phosphate fertilizers, 18.7 percent
P,O5; and potash fertilizers, 41.6 percent K,O. Plant
capacities are reported in metric tons of physical
weight.
Data on fertilizer in this report are expressed in
nutrients unless otherwise indicated.
Table 1
Principal Inputs and Products of the Soviet Fertilizer Industry a
Raw material Natural gas
Apatite Sylvinite
Phosphorites Carnallite
Pyrites
Sulfur
Sulfuric acid
Single superphosphate Potassium chloride
Triple superphosphate Potassium sulfate
Mixed-potassium-salts
a Multinutrient or complex fertilizers are made from two or three and complex fertilizers, which contain nitrogen, phosphorus, and
basic elements. Principal types are ammonium phosphate (ammofos) potassium.
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Table 2
USSR: Average Annual Rates
of Growth of Productivity
in the Chemical Industry
Total
Labor
Capital
Figure 1
USSR: Increase in Fertilizer Production
Capacity and Output
Million metric tons
of nutrients
surge in investment has not been associated with a
comparable rise in newly commissioned plant and
equipment. Despite the quadrupling of investment,
the increase in capacity during 1976-80 was only
20 percent above that achieved during 1966-70. In-
vestment costs per unit of finished capacity amounted
to 1,326 rubles per ton in 1976-80, a 77-percent
increase over 1971-75 and more than three and a half
times the 1966-70 level. The boost in cost reflects
difficulties in the assimilation of new, highly sophisti-
cated technology and the rising cost of imported
equipment. At the same time, the increase in the
output of fertilizer in 1976-80 fell sharply to only one-
half that of 1966-70 and to less than one-third that of
1971-75 (see figure 1 and appendix A, table A-1). It is
not likely that a surge of retirements offset these large
commissionings. Therefore, the gap between the in-
crements to production and capacity is probably real
and has rapidly widened since the mid-1970s.
Role of Imported Equipment
Because of the failure to adequately expand capacity
of the domestic chemical machine-building sector, the
USSR has imported a large number of facilities for
producing fertilizer and related raw materials. Fertil-
izer and fertilizer-related equipment accounted for
more than one-third of the $9 billion of Western
chemical equipment and technology ordered by the
USSR during 1971-80.' Orders peaked in 1976,
reaching more than $900 million (see appendix B)~_
' Values of chemical equipment orders are in current prices.
Appendix B provides a list of individual contracts for purchases of
fertilizer equipment and technology from non-Communist countries
Since 1969 the Soviets have made 13 purchase agree-
ments with Western firms involving 45 ammonia
plants.' In roughly the same period, they ordered
seven urea plants, 15 multinutrient fertilizer plants,
and eight phosphoric acid plants from Western com-
panies. An additional six urea plants, incorporating
Western technology, were imported from Czechoslo-
vakia. Many of the fertilizer plants purchased from
the West in recent years have been associated with
product buy-back or "compensation" deals under
which Western firms agree to long-term purchases of
Soviet ammonia, urea, and potash.
As a result, Western equipment and technology have
contributed heavily to production of ammonia, nitro-
gen, and complex fertilizers, although inefficiency in
' Five of these plants were built in the I 970s under an earlier
agreement and incorporate French technology and Soviet and
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construction and operation of these plants has denied
the USSR the full benefits.' With Western assistance,
Soviet output of ammonia and nitrogen fertilizers
doubled in the 1970s. Large ammonia plants based at
least in part on Western technology provided more
than 90 percent of capacity introduced during this
period. If operated properly, the large-scale Western-
origin plants currently used in producing over half of
total ammonia output can lower the cost of production
by 40 percent, require half the number of personnel,
reduce unit energy expenditures by 20 to 25 percent,
and use substantially less steel. Four of seven urea
plants ordered from the West in 1974-76 plus five
purchased in the early 1960s contributed about
40 percent of 1980 urea output.'
A 2,450-kilometer ammonia pipeline ordered from
France and the United States in 1975 was completed
in 1981 (see figure 2). The pipeline, which has an
annual capacity of 2.5 million tons, runs from
Tol'yatti to the port of Yuzhnyy, near Odessa, with a
spur to Gorlovka. Most of the ammonia carried by it
will be exported, but the line eventually will also
deliver 250,000 tons of liquid ammonia per year to
farms in the RSFSR and the Ukraine. In connection
with the Soviet Union's fertilizer exchange agreement
with Occidental Petroleum Corporation (see page 15),
two chemical export terminals were constructed with
Western aid at Yuzhnyy on the Black Sea and at
Ventspils on the Baltic.
The USSR also obtains some equipment for fertilizer-
related plants from other East European countries.
The Soviets have ordered about 45 large-scale sulfuric
Three-fourths of all complex fertilizer output in 1973 came from
imported plants. In 1980, only about one-fourth of complex fertiliz-
er production in the USSR was from imported plants. Western
technology provided a smaller share of the output because several
Soviet-designed plants were commissioned during 1973-80 and
because the US embargo on deliveries of superphosphoric acid
feedstock in 1980 delayed operation of seven liquid complex
fertilizer plants. During 1976-77 the Soviets purchased from the
West eight installations for the production of dry complex fertiliz-
ers having a capacity of 2.8 million tons of nutrients. Western
equipment for seven liquid complex fertilizer plants ordered in 1976
provided capacities for an additional 1.6 million tons, which will
account for most of Soviet liquid complex fertilizer based on
polyphosphoric acid. Hence, the share of output from foreign plants
probably will rise in the future.
' The real impact of Western urea technology will be felt in 1981-85
when five urea plants that began operation in 1979-81 reach full
capacity and five of 12 plants ordered from Czechoslovakia that use
acid plants from Poland, more than one-half of them
since 1975. In addition to the urea plants, Czechoslo-
vakia has supplied 22 steam reforming units for
ammonia plants and is scheduled to supply an addi-
tional 15.8
Production
The Soviet Union is richly endowed with most of the
necessary raw materials for a fertilizer industry-
particularly natural gas and potash. By 1974 it was
already the world's largest producer of fertilizer. End
products are produced in about 85 main plants; most
are located in the European part of the USSR (see
figure 3). The two main sources of phosphate rock are
the Kola apatite mines in the far north of the
European USSR, which currently supply over three-
fourths of domestic output, and the Karatau phospho-
rite mines in southern Kazakhstan, which supply most
of the rest as well as an important quantity for
transformation into elemental phosphorus. The USSR
does not possess phosphate reserves at a location
where large-scale in situ manufacture of fertilizers is
economically favorable. The deposits are remotely
sited both in relation to the market and to any sulfur
supply source; consequently, the phosphate fertilizer
industry has been built up at fertilizer-consuming
locations and sulfur-producing metal smelters. The
USSR has two major centers of potash production in
the Western Urals and in Belorussia and a smaller
one in the Western Ukraine. (See appendix C for
details concerning availability of raw materials.)
In the first half of the 1970s the Soviets met goals for
both production of fertilizer and deliveries to agricul-
ture. Production in 1975 reached 22 million tons of
nutrients, a nearly 70-percent increase over 1970 (see
figure 4 and appendix A, table A-2). Nitrogen fertiliz-
er output increased by 57 percent; phosphate fertiliz-
er, by 54 percent; and potassium fertilizer, by
94 percent (see appendix A, table A-3). Shipments to
farms in the same period also increased by 70 percent
to 17.3 million tons of nutrients.
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Figure 2
USSR: Tol'yatti-Yuzhnyy Ammonia Pipeline
Sweden ~%
*MOSCOW
Tol'yatti
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Mining potassium in the
Verkhne-Kamsk deposits in the
Anticipating continuing rapid growth in production,
the 1976-80 Plan called for a nearly 60-percent rise in
output. But production of fertilizer nutrients in 1980
was only 24.8 million tons, less than 13 percent above
the 1975 level.
Sulfuric acid, a key intermediate in the production of
phosphate fertilizer, increased by 55 percent in
1971-75. In 1976-80, however, output rose by only
23 percent, a one-fourth shortfall from plan.
Quality and Assortment
The production mix has been a major problem of the
fertilizer industry. The USSR has been unable to
raise its output of phosphate fertilizer relative to
nitrogen and potash. As a result, according to Soviet
scientists, the application ratio of N:P2O5:K2O remains
far below the optimum (see table 3). Over 55 percent
of the available land in the USSR is seriously defi-
cient in phosphorous, which is particularly important
for hastening the maturing of grain in areas that have
short growing seasons. Shortages of phosphate fertil-
izer in many regions have limited yields and reduced
the quality of crops and the effectiveness of nitrogen
fertilizers.
The assortment of various mixes of fertilizers also
remains inadequate. Soviet scientists claim that it is
necessary to double the variety of fertilizers to satisfy
the needs of agriculture. Output of high-quality chlo-
rine-free potassium fertilizers-necessary for use on
buckwheat, grapes, citrus fruits, and beans--is low.
Also, larger quantities of highly concentrated feed
phosphates are needed.
On the other hand, the Soviets have been more
successful in fulfilling the targets for raising the share
of high-nutrient and complex fertilizers (see table 4).
According to a Soviet study, the use of concentrated
and complex fertilizer with a high nutrient content
requires up to 30 to 40 percent less expenditure for
transport, storage, and application and increases the
yield of crops by up to 10 percent compared with the
same amount of nutrient contained in single-type
fertilizers.
In 1970, 30 percent of the output of phosphate
fertilizers consisted of ground phosphate rock-a
material inferior to water-soluble types, such as super-
phosphate, which are more accessible to plants. This
share fell to 20 percent in 1975 and to 13 percent in
1980, and the share of concentrated phosphate fertil-
izers increased. In the case of nitrogen fertilizers, the
share of higher nutrient urea and complex fertilizers
has increased while the share of the lower quality
form, ammonium nitrate, has decreased.
Although the output of large-crystal and granulated
fertilizer in 1980 was 30 percent higher than in 1975
and the share of the inferior powder form lower,
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 The United State. Government hea not recognued
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is not necessarily authoritative
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Figure 3
USSR: Main Fertilizer Plants
Chemical Fertilizer Plants
?" Nitrogen fertilizer
Phosphate fertilizer
Q Potassium fertilizer
Complex or multinutrient
fertilizer
Raw Material Sites
A Apatite
^ Phosphorite
Potassium salt
B Sulfur
Raw material sites not associated with
nearby cities are shown in italic ype.
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Figure 4
USSR: Fertilizer Production by Type
Million metric tons
of nutrients
Potas,IUnl
Phosphate
Nitrogen
C"I
75 76 77 78 79 80 81 82 1QQ55
Plan
caking is still a serious problem and results in large
losses in transport, storage, and application. Excessive
moisture and high acid content continue to lower the
quality of some fertilizers. Quality control specialists
at Soyuzsel'khozkhimiya (the association responsible
for deliveries of chemicals to farms) believe that
frequent violations in state quality standards may
raise the acid content of the soil-already a problem
in many areas.
Deficiencies that contributed to construction delays
and underutilization of completed capacities included
shortages of skilled labor and feedstock, equipment
failures, and transportation problems. Underlying
these and other problems, according to a continuing
drumbeat in the press, were poor management prac-
tices. The evidence suggests a worsening of these
problems during the last half of the seventies-
perhaps associated with the improper assimilation of a 25X1
massive amount of foreign-origin plant and equipment
for the fertilizer sector and for supporting industries.
The sharp slowdown in the growth of the fertilizer
industry during the the last half of the 1970s had
numerous causes. Some are longstanding but have
become more serious in recent years.
The reasons for the slow growth of fertilizer output
during 1976-80 can be put into two general catego-
ries: (a) lags in the commissioning of new capacities
for the production of raw materials and intermediates
used in the production of fertilizers and (b) the
underutilization of existing capacities at all stages of
the processes.
At a party plenum in 1979, Brezhnev criticized
Leonid Kostandov, Minister of the Chemical Indus-
try, for building plants that sat idle for lack of raw
materials:
It turns out that there are shortages of raw
materials and gas. What were they thinking about
earlier? Why did they allocate money for the
construction offactories if they were not sure they
would be able to operate? We are entitled to put
these matters before Comrade Kostandov and the
State Planning Committee.
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Table 3
USSR: Fertilizer Application Ratios
Nitrogen (N)
1.0
1.0
1.0
Phosphate (P2O,)
1.1
0.59
0.62
Potassium (K2O)
0.8
0.58
0.87
Imbalances between input- and output-related capaci-
ties were characteristic of many industries in the late
1970s and are thought by some Soviet economists to
be connected with the slowdown in total investment
growth.
Delays in achieving effective rates of operation often
are related to a failure to bring interdependent units
on stream at the same time. An ammonia plant might
be completed a year or two before the associated urea
plant, or a phosphoric acid plant might remain idle for
a year until its sulfuric acid feedstock becomes avail-
able on site. For example, an ammonia plant at
Rossosh (Voronezh Oblast, RSFSR) was completed
almost two years after an associated ammonium
nitrate plant. Failure to complete a long-delayed
sulfuric acid plant at Yefremov (Tul'skaya Oblast,
RSFSR) held up production of phosphate fertilizers.
Project Completion
Poor planning and misallocation of investment re-
sources within the chemical industry are two of the
primary causes of construction problems. Also, con-
struction resources often are dissipated by simulta-
neous construction of a large number of facilities. In
1975 Kostandov said that the fertilizer program for
1976-80 could be met if 10-12 million tons of capacity
(standard units) were put into operation each year, but
the Ministry of the Chemical Industry itself post-
poned 80 percent of the program for commissioning
facilities until the second half of the five-year plan-
causing many unfinished projects to be carried over
into the 1981-85 Plan period. Perhaps the Soviets
realized that it was impossible to meet these deadlines
Table 4
USSR: Measures of Fertilizer Quality
Average nutrient 26 30 36 38 40 40-42
content
Share of high-nutrient 51 63 74 83 88 91
and complex fertilizer
Sources: Foreign Broadcast Information Service, JPRS 78989, 16
September 1971; Izvestiya, 20 December 1981; Planovoye
khozyaystvo, No. 7, July 1977; Ekonomicheskaya gazeta, No. 17,
April 1982, pp. 1-2.
earlier in the plan and hoped to gather strength and
shoot ahead. Things turned out differently, however,
and less than half of the reduced 1976-78 assignment
was fulfilled.
The growth of uncompleted construction in the chemi-
cal sector has outstripped that in the rest of industry.
According to Soviet statistics, the value of this con-
struction reached 5 billion rubles by the end of 1975,
an increase of 75 percent over 1970 compared with a
45-percent increase in other industrial sectors. It
peaked in 1978 at more than 9 billion rubles, equiva-
lent to two years' investment in the chemical sector.
In an effort to expedite the completion of chemical
projects, the number of new construction starts was
reduced by more than two-fifths in 1979. As a result,
the value of uncompleted capacity fell to 7.6 billion
rubles by the end of 1980. The Soviets had even less
success in the fertilizer sector of the chemical indus-
try. The Soviet press reported that during the first
three years of the 1976-80 Plan, unfinished construc-
tion increased by 50 percent, and uninstalled equip-
ment valued at 1.6 billion rubles piled up.
According to the Soviet press, output per employee is
only about 50 percent of the norm on a whole series of
fertilizer construction projects on which extensive
resources have been concentrated. The reasons given
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are poor preparation of construction sites and faulty
procedures (inadequate and uneven supply of raw
materials, poor scheduling, and shoddy workmanship)
that require an unusual amount of followup time. As a
result, thousands of tons of equipment, including
imported machinery, sit unused at construction sites
for years or sometimes are pilfered to finish other
construction
A Soviet journal reported that issuance of technical
documentation for fertilizer projects is delayed by an
average of two years, preventing timely arrangements
for the manufacture of fabricated steel sections, pre-
cast concrete pipe, and other basic components. Flaws
in documentation are common, necessitating changes
that result in the overexpenditure of construction
outlays. The machine-building plants frequently fail
to deliver equipment on time, and, when it does arrive,
it is often incomplete.
In the USSR the existing norm for putting a 400,000-
ton-per-year ammonia plant on stream is six years-
one and a half years for planning, three for construc-
tion, and one and a half for attaining full operation. In
the industrial West it takes roughly two years to put a
comparable plant on stream. In actual experience the
Soviet norms usually are exceeded. Because equip-
ment becomes obsolete in seven to eight years under
today's conditions, the plant is often outdated when it
begins operation.
Underutilized Capacity
The share of underutilized fertilizer capacity has
grown substantially in recent years (see table 5)
because of poor management, improper assimilation
of foreign technology, poor design of Soviet equip-
ment, labor and raw material shortages, and transpor-
tation delays.
According to the Soviet press, more than half of the
fertilizer enterprises that have gone into operation in
the past few years have failed to operate at capacity.
In 1978 a survey of 21 fertilizer projects finished in
1971-75 revealed that they were operating at only 60
percent of capacity. Although ammonia production
capacity expanded by 10 million tons during 1976-80,
output increased by only 4.7 million tons. Similarly,
capacities for 2.4 million tons of potassium fertilizer
nutrients were commissioned during 1976-80, but
Table 5
Change in Underutilized
Capacity Compared With 1975
Apatite concentrate
1.2
0.2
Synthetic ammonia
2.5
0.5
Sulfuric acid
2.0
2.9
Nitrogen fertilizer
5.3
4.7
Phosphate fertilizer
5.7
7.4
Potassium fertilizer
-1.4
-2.6
0 7.2 25X1
1.1 9.5
1.7 7.2
4.1 10.5
11.2 14.6
0.9 19.9
Source: Ekonomika i organizatsiya promyshlennogo proizvodstvo
(EKO), No. 3, 1982, p. 46.
output increased by only 120,000 tons. Calculations
based on the total of new capacities added since 1961
suggest that overall capacity utilization ranged be-
tween two-thirds and three-fourths in 1979 (see
figure 5 and appendix A, table A-4). The range in the
estimate of the underutilization of capacity is deter-
mined by the assumption concerning the extent of
retirement of capacity in place in 1961 (17 million
tons of standard units).9 We have no evidence that any
of the production capacity installed after 1961 was
retired during this period. A Soviet press report
indicating a 76-percent capacity utilization rate in
1982 confirms these estimates.
The Karatau-Dzhambul phosphate fertilizer complex
in Kazakhstan is one of the best examples of unused
capacity. An article in the Soviet press claimed that,
during 1976-80, production of fertilizer at this com-
plex was only 45 percent of the planned level. A
phosphate feed additive shop launched in 1980 was
still idle in late 1981. In part this may have reflected
' The two-thirds figure assumes zero retirement; the three-fourths
figure assumes the retirement by 1981 of all of the 17 million tons
of capacity (all tons in this paper are metric). According to an
article in the Soviet press, if the fertilizer industry had operated at
full capacity in 1979, an additional 15 million tons of fertilizer
(standard units) would have been produced, indicating that overall
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Figure 5
USSR: Estimates of Fertilizer Plant
Capacity Utilization
Equipment Problems. With the current emphasis on
the economies of scale of large-unit plants, the techno-
logical and equipment problems that now idle capaci-
ty cause much larger shortfalls than in the past.
Percent Assimilation of advanced fertilizer technology has
been hampered by improper handling and installation
of machinery, defective equipment, maintenance
problems, and difficulties in mastering new tech-
niques. The assimilation of new sophisticated ammo-
nia plants has been a particular problem. These large-
scale plants require a highly complex system of
assembly involving tanks, tubes, compressors, and
other equipment with narrow tolerances. The four
ammonia plants at the Tol'yatti complex supplied by a
US firm were commissioned in 1978-79 but have had
continuous problems, resulting in operations well be-
low capacity. For example, the main compressors
were damaged because of faulty installation, and
turbine bearings were ruined when local operators
started them without any lubrication.
in mid-1981 three plants were
the lack of adequate labor, at least of the appropriate
mix of skills. The complex had only two-thirds of the
planned labor force in 1981. Construction of housing
and other supporting infrastructure for the labor force
is lagging.
The Soviet press reported that disruptions in the
operation of potassium and nitrogen fertilizer plants
in the'Berezniki (Perm' Oblast) area between 1976
and 1980 caused production shortfalls of 4.5 million
tons of potassium fertilizer and 1.9 million tons of
nitrogen fertilizer (probably standard units). Shut-
downs were caused by shortages of railroad cars,
outmoded and defective equipment, delays in deliver-
ies of replacement equipment, and labor shortages.
Labor productivity at the Uralkaliy potash plant in
1980 was lower than in 1975, and "violations of labor
discipline" reportedly occurred 50 percent more fre-
quently.
operating at only 10 percent of capacity and one plant
was not operating at all because it had been scavenged
for spare parts.
The notable failure to introduce new technology in the
production of domestic machinery and equipment
stands in sharp contrast to the importation of massive
amounts of highly complex "state-of-the-art" machin-
ery and equipment. Investment in the chemical
machine-building industry has lagged sharply behind
investment in the chemical industry. As a result, the
fertilizer industry lacks the right composition of ma-
chinery for such a complex industry. Equipment is
outmoded and of poor quality, lacks corrosion resist-
ance, and wears out prematurely
Western equipment operated
three times longer than Soviet and East European
equipment. New facilities outfitted with domestic
equipment at the Soligorsk potash mine did not
operate at the start because the design of the equip-
ment was obsolete and its output was so low that
redesigning and rebuilding of new equipment was
necessary. A Soviet newspaper reported that because
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of continuing problems the facility was producing at
only 36 percent of capacity in early 1980, one year
at the Karatau-Dzhambul phosphate 25X1
90 percent of the work force in 1976
after startup.
The same report stated that large facilities for the
production of nitric acid and ammonium nitrate at
several nitrogen fertilizer plants were idle because of
the poor quality of the equipment, especially turbo-
compressors supplied by Khabarovsk's Energomash
plant.
Labor Problems. Contributing to the underuse of
capacity has been a dramatic failure to meet the
demands for skilled labor generated by the shift to a
higher level of technology. Indicative of the major
technological transition throughout the chemical in-
dustry was the 125-percent total increase in the value
of plant and equipment (constant prices) per worker in
the 1970s in the chemical industry compared with the
95-percent increase for the balance of industry. Dur-
ing the same period the number of graduates in
chemical technology from higher and specialized sec-
ondary schools fell 16 percent.
Fertilizer and related raw materials sectors were
among the most seriously affected by the skilled labor
shortage in the chemical industry in 1976-80. Work-
ers are poorly trained, a situation worsened by weak
engineering and technical guidance. Low output of
many fertilizer plants is ascribed increasingly to the
fact that workers' skill levels are below those required
by the rising technical level of production. In large
single-train ammonia plants, for example, operators
need one and a half to two years of training, compared
with three to four months in older plants. As in all of
Soviet industry, an excessive number of personnel are
engaged in relatively unskilled auxiliary work such as
packaging, sorting, loading, unloading, and repair.
Unpleasant and sometimes hazardous working condi-
tions and a lack of housing and social amenities
discourage employment in the fertilizer industry and
result in a high labor turnover. It is especially difficult
to attract skilled workers to plants located in rural
regions of the Central Asian republics of the USSR.
Consequently, fertilizer plants use a large number of
labor camp prisoners who lack the necesssary skills,
incentive, and discipline.
Feedstocks
Shortages of raw and intermediate materials also
contributed to the poor use of production capacity
during 1976-80.
Sulfuric Acid and Phosphate Raw Materials. De-
mand for phosphate raw materials is growing rapidly
because the planned product mix requires very large
increases in multinutrient phosphate-containing fertil-
izers. Inadequate supplies of sulfuric acid and phos-
phate raw materials helped keep increases in phos-
phate fertilizer to less than one-fourth of that
originally scheduled for 1976-80. These deficiencies
reflected problems in developing phosphate deposits
and shortages of sulfur for sulfuric acid. The US
embargo of superphosphoric acid (SPA) contributed to
the shortfall in phosphate fertilizer output in 1980. In
the tight phosphate market of 1980, the Soviets were
able to replace only about half of the P2O, that they
had expected to receive from the United States. The
United States is the only large-volume supplier of
SPA, and seven Soviet liquid complex fertilizer plants
purchased from France are specifically designed to
use SPA as feedstock for the production of a fertilizer
with a P2O5 content of 34 percent.
Natural Gas. Interruptions in supplies of Soviet natu-
ral gas, especially during the unusually severe winter
of 1978-79, disrupted the production of ammonia. In
addition, the supply of natural gas from Iran was
interrupted in late 1978 and finally cut off in 1980,
causing regional problems in ammonia production.F
Nitric Acid. As indicated above, the Soviets have
encountered serious technical problems with new do-
mestically produced turbocompressors at several in-
stallations for nitric acid, an essential input for ammo-
nium nitrate fertilizer. Large complexes for nitric acid
and ammonium nitrate at Novgorod, Chirchik, Doro-
gobuzh, and Rossosh have frequently been idle be-
cause of poor-quality equipment. The resulting diffi-
culties have delayed introduction and assimilation of
new nitrogen fertilizer capacity.
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Transportation
Finally, transportation problems have added to the
stresses in the fertilizer industry. The growing produc-
tion of fertilizers in the USSR is making delivery and
storage an acute problem. Railroad cars are in short
supply, many are damaged, loading operations are
inefficient, and port facilities are inadequate. Further-
more, railroad personnel are little concerned with how
much fertilizer is lost en route. The Soviets estimate
that 10 to 15 percent of fertilizer is lost during
transportation and storage, compared with about
5 percent in the United States. Over 90 percent of
fertilizers are hauled by rail with an average haul of
over 1,000 km. Extensive crosshauling burdens the
lines unnecessarily. The turnaround time for railroad
cars shipping fertilizers is 50 to 100 percent above the
norm of six days. A shortage of packaging material
and specialized cars compels the industry to ship
70 percent of all fertilizers in bulk in boxcars, and
even in open gondola cars in violation of regulations.
In addition, most railroad stations have no special
unloading machinery or trackside roofed storage
Transportation problems also complicate the supply of
raw and intermediate materials. Phosphate and pot-
ash mines and beneficiation plants have been shut
down periodically when storage facilities become sat-
urated because of congested transport systems and
railcar shortages. Shortages of railroad cars were a
major factor contributing to the fall in potash output
in 1979.
Fertilizer
Although domestic use remains far below recom-
mended and planned allocations, the share of fertilizer
production going to exports has been rising. During
1976-80, fertilizer exports grew at an average annual
rate of 5.4 percent, more than twice the growth rate in
output. In 1980 Soviet exports of all fertilizers-
nearly 4 million tons of nutrients-were more than
twice the 1970 level (see figure 6 and appendix A,
table A-4). Their 1980 value was equivalent to nearly
$800 million, seven times that earned in 1970. Hard
currency sales accounted for one-fourth of total ex-
ports and included some as compensation for purchase
Figure 6
USSR: Fertilizer Exports
Million metric tons
of nutrients
of Western production facilities. Nitrogen fertilizer
sales tripled and potash sales doubled between 1970
and 1980. During the 1979/80 marketing year (July-
June), the USSR accounted for about 15 percent and
8 percent, respectively, of world exports of potash and
nitrogen fertilizers on a tonnage basis. The small
quantities of phosphate fertilizers exported were at
the 1970 level, reflecting priority domestic require-
ments. Small quantities of phosphate fertilizers also
have been imported since 1971.
Soviet exports of fertilizers go mainly to East Europe-
an countries. In 1980, for example, 56 percent of total
potash exports (nutrient basis) went to these countries.
Major hard currency purchasers-Japan, Italy, and
Belgium-accounted for 17 percent of total potash
deliveries. Cuba, Czechoslovakia, Vietnam, and India
were the principal customers for nitrogen fertilizers in
1980, accounting for nearly one-half of total nitrogen
exports, while about one-fourth went to all East
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Table 6
USSR: Ammonia Exports
Total
88
Western Europe 53
Eastern Europe 22
North America
8
342
855
1,000
Africa
8
11
31
55
Sources: Vneshnyaya torgovlya, 1975; Fertilizer International,
No. 149, November 1981; United Nations trade data.
European countries. In the same year more than one-
fourth of Soviet urea shipments went to India, Cuba,
and Pakistan.
Soviet policymakers probably entered into supply
agreements during 1976-80 with bilateral trade part-
ners, mainly East European countries, and with West-
ern firms for product payback with the expectation
that fertilizer production growth was going to be close
to plan. With the marked shortfall in output during
this period, deliveries to agriculture, rather than
exports, suffered.
materials, beginning in 1980. Occidental has agreed
to sell I million tons of superphosphoric acid to the
USSR each year and buy 1.5 million tons of ammonia
and 1 million tons each of urea and potash. Smaller
quantities of the same products were traded by the
two parties in 1978 and 1979. Occidental is to buy an
additional 600,000 tons of ammonia each year for 10
years starting in 1979. Soviet earnings from these
sales are to provide funds to repay the US credits used
to finance four ammonia plants purchased from an-
other US firm and fertilizer handling and storage
facilities provided by Occidental for two Soviet ports.
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Exports of Fertilizer Feedstocks
The USSR is the world's leading exporter of ammo-
nia, the key element in the production of nitrogen
fertilizer. Soviet exports of ammonia jumped from
88,000 tons in 1975 to 2.2 million tons in 1980,
accounting for about one-third of total world trade
(see table 6). Agreements involving the purchase of 40
ammonia plants from the West require the foreign
companies to buy back a percentage of the ammonia
produced. About three-fourths of Soviet ammonia
shipped in 1980 was associated with either a fertilizer
agreement with Occidental Petroleum Corporation or
compensation for Western equipment.
In the agreement between Moscow and the Occiden-
tal Petroleum Corporation concluded in 1973-74 and
a number of subsequent contracts, trade was estab-
lished in various fertilizer materials and services. The
basic agreement is for a 20-year exchange of fertilizer
Occidental agreed to purchase additional Soviet am-
monia beginning in 1980 to compensate for the cost
($300 million) of equipment and services for the
ammonia pipeline. Thus, planned annual purchases of
ammonia by Occidental were to be substantially
higher than in the original agreement. In January
1980, however, President Carter imposed a one-year
quota on US imports of Soviet ammonia that limited
shipments to about 1 million tons in 1980.'? After the
10 In October 1979 the International Trade Commission (ITC) ruled
that ammonia imports were disrupting the US market and called on
President Carter to impose quotas. In December 1979 President
Carter rejected the recommendations of the ITC stating that
import quotas would not be in the national interest. Under pressure
from US ammonia producers who argued that low-priced ammonia
imports were seriously damaging domestic production, Carter
reversed his December decision and in January imposed a one-year
quota on US imports of Soviet ammonia that limited shinments to I
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Soviet invasion of Afghanistan in late 1979, although
the United States embargoed exports of all phosphate
materials, including SPA, the Soviets continued to
deliver ammonia to Occidental. US deliveries of SPA
resumed in mid-1981.
The USSR also exports large quantities of phosphate
rock in the form of apatite concentrate, about 80
percent of it to Eastern Europe. Soviet exports to
Western Europe are currently less than 1 million tons,
down from a peak of nearly 2.5 million tons in 1973.
Despite domestic shortages, the Soviets were aggres-
sively marketing high-quality apatite phosphate rock
in Western Europe in early 1982 in an effort to prop
up hard currency earnings. In addition to SPA from
the United States, the Soviets also import small
amounts of SPA and phosphate fertilizers from West
European countries for hard currency.
In 1980 Japan and Italy probably received about
160,000 tons of urea as compensation for equipment.
As compensation for aid in the construction of the
Kingisepp phosphorite complex, the Soviets agreed to
ship monoammonium phosphate to several East Euro-
pean countries from 1976 to 1985. Bulgaria and
Czechoslovakia receive about 85,000 tons (product
weight) annually, and unspecified quantities go to
East Germany and Hungary. Additionally, in pay-
ment for aid in developing the Soligorsk potash mine,
the Soviets export 1 million tons of potash (K2O)
annually to Poland under an agreement ending in
1985.
In an attempt to turn the fertilizer industry around,
the Soviets established a separate Ministry for Fertil-
izer Production in November 1980. But many of the
problems that plagued the industry during the 1970s
are continuing to block achievement of the goals set
for the 1980s.
Raw Materials
Raw materials used in the production of nitrogen and
potassium fertilizers-natural gas and potash ores-
are ample to support future production. Nonetheless,
production costs are still increasing, and shortages of
raw and intermediate materials for phosphate fertiliz-
ers persist. Domestic supplies of these materials prob-
ably will have to be supplemented by purchases on
world markets. (A more detailed discussion of raw
materials is presented in appendix C.)
Production Goals for 1985 "
In the 1981-85 period the USSR plans to increase
fertilizer output by 45 percent, to 150.8 million tons of
standard units (or about 36 million tons of nutrients),
a large reduction from the preliminary goal of 170
million tons announced in 1978 (see table 7). The
reduction undoubtedly was prompted by the huge
shortfalls in fertilizer production in 1979-80 and
perhaps in part by a realization that sufficient support
facilities could not be provided to use effectively a
larger volume of fertilizer in the 1981-85 period. To
reach the current 1985 target, the increment in
production would need to more than triple from its
level in 1976-80, for an average annual rate of growth
of 7.7 percent. Major increases would be needed in
the output of two key intermediate inputs, ammonia
and sulfuric acid
Meanwhile, planned investment in the fertilizer indus-
try in 1981-85 is 14 billion rubles, an increase of only
9 percent over the previous five-year period. The small
boost in outlays for new plants and equipment, cou-
pled with ambitious production targets, reflect an all-
out effort to improve the utilization rates of plants
already in operation. Minister of Fertilizer Production
Petrishchev declared in a Soviet agricultural journal
that over one-half of the increase in fertilizer produc-
tion planned in the 11th Five-Year Plan will result
from more intensive employment of old and new
capacity. By the end of the period they expect to push
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Table 7
USSR: Fertilizer Production
Type of
Fertilizer
Plan 1985
Standard
Units
Nutrients
Standard
Units
Nutrients
Total a
103.9
24.8
150.8
36
Nitrogen
49.9
10.2
74.2
_
15.2
Percentage Increase
1981-85
(Nutrients)
45
49
-13
a Includes small quantities of trace fertilizers and nitrogen and
phosphate feeds.
Sources: Narodnoye khozyaystvo SSSR v 1980 godu and Zhurnal
vsesoyuznogo khimicheskogo obshchestva im. D. I. Mendeleyeva,
vol. XXVIII, No. 3, 1982, p. 11.
capacity utilization up to the following levels: fertiliz-
ers, 95.2 percent; ammonia, 95.5 percent; and sulfuric
acid, 93.2 percent.
If the utilization rate of fertilizer plants in 1980
ranged from 69 to 77 percent (see appendix A, table
A-5) and the Soviets succeed in increasing the rate to
95.2 percent, they could produce an additional 5.8-9.4
million tons of nutrients just from plants operating in
1980 and over one-half of the increase in fertilizer
production that is planned in this period would come
from more intensive use of old capacity.
We estimate that the capacity utilization rate for
ammonia averaged about 70 percent in 1980. If a
95.5-percent capacity utilization rate were achieved
for ammonia plants in 1985, an additional 5 million
tons of ammonia could be obtained annually from
plants operating in 1980. These rates of utilization,
however, are quite high, and unless the industry
overcomes problems currently plaguing it, they will
not be achieved.
Estimated Production in 1985
We estimate that total output of fertilizer in 1985 will
amount to between 30 and 31 million tons of nutrients
(instead of the planned 36 million tons), with the
estimated composition of output shown in table 8. We
believe a failure to produce and supply to agriculture 25X1
planned amounts of fertilizer will be one of the
reasons the Brezhnev Food Program will fall short of
its goals.
Nitrogen fertilizer output is difficult to project be-
cause of problems in estimating ammonia capacity in
the 1980s. We lack information on Soviet-engineered
plants and the retirement of smaller older plants. The
Soviets probably will not succeed in their plans to 25X1
build and put into operation 13 large-scale ammonia
plants during 1981-85. Of the 13 plants, 10 were
ordered from Japan in 1977. Construction of four of
these apparently has not begun, and as a result, will
be completed after 1985
We estimate from information on plant construction
that roughly 5 million tons of ammonia capacity will
be added during 1981-85. With the additional contri-
bution of plants that came on stream in 1979 and
1980 and some improvement in capacity utilization,
we estimate the Soviets will produce roughly 23 mil-
lion tons of ammonia in 1985. Of this, 3.2 million tons
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Table 8
USSR: Estimated Fertilizer Production, Supply to
Agriculture, and Exports, 1985
Supply to Remainder Exports
Agriculture b
a Including chemical feed additives.
b Excluding chemical feed additives.
Relatively small quantities of nitrogen and potash balances will be
used for nonfertilizer purposes. Most of the phosphate balance
represents feed additives for animal husbandry.
are earmarked for export in compensation and other
agreements (see page 21). Of the remaining ammonia,
about 16 million tons (equivalent to 13 million tons of
nitrogen) probably will be used for fertilizer. Small
quantities of ammonia are used for other industrial
purposes.
Assuming the availability of Soviet phosphate raw
materials and imports of about 1 million tons of P2O5
in the form of phosphoric acid, we estimate that
Soviet phosphate fertilizer output will amount to
nearly 8 million tons of nutrient in 1985. This increase
will be primarily in the form of complex fertilizers.
Much of the new capacity will depend on the Soviets'
own design and construction capability, but several
new complex fertilizer plants based on Western tech-
nology are expected to be commissioned during 1981-
Expansion of potash facilities should raise output to
between 8.8-9.6 million tons of K2O in 1985. The
quality of the product will be improved through more
widespread use of granulation facilities. At present
only one-fourth of potash fertilizer is granulated. F_
Progress to Date
Fertilizer production in the 11th Five-Year Plan is off
to a poor start. In 1981 output amounted to 26 million
tons of nutrients, a 5-percent increase over 1980, but a
5-percent shortfall from plan. Fertilizer output fared
worse in 1982, reaching 26.7 million tons of nutrients,
less than 3 percent above 1981 production and a
7-percent shortfall from plan. Plans for 1983 call for a
nearly 6-percent increase in fertilizer output
Bottlenecks in Other Sectors
The scheduled investment in the fertilizer industry
and the plans for reducing losses will have to contend
with the bottlenecks that have emerged in the provi-
sion of industrial supplies and transportation services.
Shortages of steel, for example, are already curbing
growth in machinery output. With a limited base for
the production of machinery for the civilian sector,
equipment for the oil and gas industry is likely to
receive priority over the production of fertilizer equip-
ment. Shortages of construction materials will persist.
Cement production, which is very energy-intensive, is
not expected to increase markedly.
The outlook for transportation is not promising either.
Production of rolling stock, which has decreased
3 percent annually since 1976, continues to decline.
According to the Soviet press, in the first quarter of
1982, the Ministry of Railways supplied 14,000 fewer
cars than targeted for agricultural chemicals, result-
ing in critical shortages of rolling stock at major
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potash and phosphate raw material enterprises. order to supply them, it was essential to complete raw
Freight turnover for railroads in 1982 was 1 percent material and intermediate projects scheduled for
below the 1981 level. Additionally, roads in rural 1981-82. However, the Soviet press reported that of
areas are in poor condition, hampering deliveries of 20 fertilizer plants due for commissioning in the first
fertilizers to farms. 11 months of 1981, only two were successfully com-
pleted. The usual defects were blamed-sloppy work
Construction delays are continuing. In the current by Soviet contractors, delays in deliveries of building
five-year plan about half of the new fertilizer produc- materials, and uncoordinated site work.
tion capacities-on the order of 5.2 million tons of
nutrients-are scheduled for startup in 1983-84. In
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? Failure to complete plants for sulfuric acid is hold-
ing up the development of phosphate fertilizer. Lack
of housing at a sulfur mine in Yavorov prevented
the startup of a completed plant in 1981.
? The Soviets have halted construction of an imported
ammonia plant in Siberia and postponed the con-
struction of another in Uzbek because of labor and
construction material shortages.
? Plants continue to be underutilized. In October
1982 the Soviet press reported that production
capacities were operating at only 76-percent capaci-
ty, with only 67-percent utilization at phosphate
fertilizer enterprises where increased production is
most urgent. In 1981, 25 of 30 fertilizer enterprises
in the RSFSR were operating below capacity.
The fertilizer industry also will have to share in the
general labor scarcity. A CIA study estimated that
during the 1980s the working-age population will
increase by only one-fourth as much as it did during
the last half of the seventies. Also, because of this
slowdown, the number of graduates in chemical tech-
nology from higher and specialized secondary schools
probably will continue to fall.
Deliveries to Agriculture
Assuming the projected shortfall in production, we
estimate that 23.2-23.9 million tons of nutrients will
go to agriculture, with the composition by type as
shown in table 8. According to Soviet scientists,
agriculture needs 36.2-36.6 million tons of fertilizer
nutrients, including 19.6 million tons for grain, to
meet minimum norms." Even if plans to deliver 26.5
million tons in 1985 are fulfilled, only three-fourths of
these needs will be satisfied. If, as the Soviets claim,
each ton of fertilizer nutrients produces an additional
5 tons of grain, the estimated shortfall in planned
deliveries of fertilizer to agriculture in 1985 will cost
13-16 million tons of grain worth about $1.5-2 billion
at 1982 prices.
11 Excludes fertilizer for hay and pasturage. For each crop and
climate zone of the country, Soviet scientists have established a
range of optimal fertilizer applications. We used the lower end of
Trade Patterns
We estimate that the USSR will remain a net import-
er of grain and a net exporter of fertilizer. Even
though the relationship between world fertilizer and
grain prices argues for using fertilizer domestically,
the Soviets have chosen to continue to export. A
variety of reasons may influence export policy:
? Exports to Eastern Europe and selected Western
trading partners are generally associated with bilat-
eral trade agreements, reciprocal exchange agree-
ments of chemicals and other products, and product
buy-back for Western equipment. We expect the
Soviets to honor these commitments.
? The Soviets may be physically unable to distribute,
store, or apply larger amounts of fertilizer than we
anticipate, because transport and storage facilities
and application equipment will probably not be
developed in consonance with the expansion of
production.
tiveness.
? Application of additional nitrogen and potassium
fertilizer with anticipated limited supply of phos-
phate fertilizer would further unbalance the fertiliz-
er nutrient ratio, lowering overall fertilizer effec-
In 1985 the Soviets could have an exportable "sur-
plus" of about 2.5 million tons of nitrogen and 2.5-3.0
million tons of potash (KZO). Allowing for shipments
to Eastern Europe, payback on compensation deals,
and exports to soft currency countries, fertilizer sales
to hard currency customers in 1982 prices probably
would be $200-400 million, with nitrogen fertilizer
accounting for 60 to 75 percent of the value."
The Soviets are committed to export in the mid-1980s
large quantities of ammonia associated with compen-
sation deals and other long-term contracts. The trans-
actions listed in table 10 will commit for export
annually at least 3.2 million tons of ammonia worth
about $450 million in 1982 prices.
25X1
25X1
25X1
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25X1
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Table 10
USSR: Committed Ammonia
Exports in Mid-1980s
United States Occidental 1,500,000 c
600,000
tially.
through export of high-technology low-energy chemi-
cals-for example, paints, dyes, and additives. In
addition, exports of nitrogen fertilizers, particularly
urea, to other countries are expected to rise substan-
Although apatite concentrate exports to the West
increased in 1980-81, they are not expected to rise
appreciably in the rest of the 1980s. The Soviets have
found that Kola apatite concentrates have proved to
be the only satisfactory, trouble-free feedstock for the
Anic 100,000 country's phosphate fertilizer plants. Deliveries to
Intsel 195,000 Eastern Europe are not likely to increase-the Soviets
Rhone Poulenc 40,000 warned these countries some years ago that supplies
Japan Mitsui 100,000
Finland Kemira 100,000
CEMA countries 350,000 d
to meet increased demand would have to come from
other sources.
East Germany (Rostock) 300,000 The Soviets are unlikely to increase the small quanti-
Other countries 50,000 ties of phosphate fertilizers that go to CEMA coun-
a Tonnage to be supplied under compensation deals is approximate tries, but annual deliveries of 114,000 tons per year of
and will be determined by the price of ammonia. P2O5 in the form of monoammonium phosphate to
b An additional unspecified amount of ammonia probably will go to Eastern Europe in payment for assistance in the
Belgium as partial payment for superphosphoric acid. Additional
ammonia may also go to French and British firms under long-term construction of the Kingisepp phosphorite mine will
agreements that include ammonia as one of the products to be continue through 1985.
supplied by the USSR.
This transaction may result in the export of an additional 300,000
tons per year.
d In accordance with Soviet plans to provide CEMA countries with
energy-intensive chemicals such as ammonia, shipments could be
higher.
e In 1979 East Germany ordered from France a large nitrogen
fertilizer plant that will use ammonia supplied by the USSR.
Assuming no further compensation deals are made,
however, only 1.5 million tons of ammonia will be tied
to compensation after 1990.
Nitrogen fertilizer exports are expected to expand
rapidly in the mid-1980s (see table 8). Urea exports
associated with compensation deals should amount to
about 550,000 tons of nitrogen in 1985, more than 80
percent of which is associated with the Occidental
fertilizer exchange agreement. Nitrogen fertilizer
shipments to CEMA countries are expected to in-
crease to 700,000 to 800,000 tons of nitrogen in 1985.
Czechoslovakia has announced that growing domestic
demand for nitrogen fertilizers will be met with
imports from the USSR, with payment being made
Barring further embargoes by the United States, the
Soviets should receive, until 1997, 700,000 tons per
year of P2O5 in the form of superphosphoric acid.
Deliveries of 70,000 tons of SPA (P2O5 basis) from
Belgium are scheduled to continue through 1985 and
imports of 60,000 tons per year of merchant-grade
phosphoric acid (P2O5 basis) from Finland are to
continue through 1986. The Soviets recently signed a
contract with Spain to supply 98,000 tons of SPA per
year (P2O, basis) for a 10-year period beginning in
1984. Additionally, the Soviets may import phosphate 25X1
materials from Morocco, Tunisia, and possibly
Large quantities of potash will be available for export,
but a possible oversupply in the world market in the
mid-1980s may limit sales to non-Communist coun-
tries. Under the Occidental fertilizer exchange agree-
ment, the USSR is to supply about 400,000 tons of
potash (K2O) annually to Occidental. The firm has
taken only limited quantities of potash so far because
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of the poor quality of the product. The USSR will
continue to deliver to Poland 1 million tons of potash
(K20) annually at least through 1985 and also will
supply potash to other East European countries.
Soviet fertilizer exports in 1981 amounted to 3.6
million tons of nutrients, an 8-percent drop from the
1980 level. Hard currency countries accounted for
most of the fall in potash shipments, reflecting the
weakness in the potash market. Nitrogen fertilizer
exports, mainly urea, rose by 24 percent to reach
nearly 1.3 million tons of nitrogen
Future Purchases of Western Equipment
Because of the enormous volume of Western fertilizer
equipment and technology purchased during the
1970s, Moscow will cut back orders of fertilizer
equipment in the 1980s. Potential purchases in the
West include equipment to process potassium ores and
to produce phosphoric acid and complex fertilizers as
well as selected types of equipnient, such as compres-
sors. But hard currency constraints are likely to limit
purchases of Western technology for the fertilizer
industry even in these areas.
Moreover, the disappointing returns on imported
equipment probably are one of the major arguments
of those within the Soviet Union who oppose increased
reliance on Western technology in the 1980s. As a
result, domestic production and East European im-
ports will supply an increasing amount of the equip-
ment used in Soviet fertilizer plants. Leonid Kostan-
dov, now promoted to Deputy Prime Minister,
recently stated that the USSR does not intend to buy
any more large-capacity ammonia units but instead
will continue building its own medium-size plants
with help from Czechoslovakia. According to Oleg
Bogolomov, Director of the Institute of Economics of
World Socialist Systems, the benefits that the USSR
realized from saving time through foreign purchases
of Western chemical equipment are outweighed by
the disadvantages it is suffering from not having
developed this industry for itself. He claims that in
the future the USSR will import only those types of
equipment that can directly help the USSR develop
its own industries.
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Appendix A
Statistical Tables
Table A-1
Soviet Fertilizer Industry:
Increase in Production Related
to Commissioning of New Capacity
1966-70 1971-75
Gross increase in fertilizer 7.9 9.1
capacity a
Increase in fertilizer 5.7 8.9
production
a Converted from "standard units" by multiplying by average
nutrient content (24 percent) per standard unit.
1976-80
1981-85
1981
1982
Plan
Actual
Plan
13.9
9.4
10.3
0.5
NA
11.9
2.8
11.2
1.2
NA
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Table A-2
USSR: Fertilizer Production
and Deliveries to Agriculture
Standard
Units
Nutrients
1960
13.9
3.3
1965
31.3
7.4
1970
55.4
13.1
1971
61.4
14.7
1972
66.1
15.9
1973
72.3
17.4
1974
80.4
19.4
1975
90.2
22.0
1975 Plan
90.0
22.0
1976
92.2
22.6
1977
96.8
23.5
1978
98.0
23.7
1979
94.5
22.1
1980
103.9
24.8
1980 Plan
143.0
33.9
1981
109.1
26.0
a Data are expressed in Soviet standard units (a statistical concept)
and 100-percent nutrients (N, P2O? K2O). Under the standard unit
concept, nitrogen fertilizer contains 20.5-percent N; phosphate
fertilizers, 18.7-percent P2O5; and potash fertilizers, 41.6-percent
K2O. Production data include chemical supplements to livestock
feeds and probably some fertilizer materials that are used in industry
and exports.
b Data are believed to be unadjusted for losses in fertilizer nutrients
en route to farms and during storage.
Total includes feed supplements as well as fertilizer for crops.
d Estimated.
Total c
Standard
Units
Nutrients
Standard
Units
Nutrients
11.4
2.6
11.3 d
2.6
27.1
6.3
26.9 d
6.3
45.6
10.4
45.4
10.3
50.5
11.5
50.0
11.4
54.8
12.5
53.9
12.4
60.1
13.8
58.5
13.5
65.9
15.0
63.8
14.6
75.7
17.7
73.5
17.3
75.0
17.5
72.0
16.9
77.7
18.3
75.0
17.7
79.8
18.6
77.0
18.0
81.2
18.8
79.0
18.4
78.9
17.9
76.3
17.4
84.7
19.3
82.0
18.8
120.0
27.6
115.0
26.5
87.4
19.8
84.2
19.2
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Table A-3
USSR: Fertilizer
Production by Type a
Total
Nitrogen
(N)
Phosphate
(P:O,) b
Potassium
(K2O)
1960
3,281
1,003
1,192
1,084
1965
7,389
2,712
2,300
2,368
1970
13,099
5,423
3,585
4,087
1971
14,670
6,055
3,802
4,807
1972
15,931
6,551
3,940
5,433
1973
17,429
7,241
4,261
5,918
1974
19,352
7,856
4,902
6,586
1975
21,998
8,535
5,511
7,944
1976
22,590
8,609
5,664
8,310
1977
23,493
9,114
6,024
8,347
1978
23,653
9,299
6,153
8,193
1979
22,137
9,151
6,344
6,635
1980
24,767
10,241
6,455
8,064
1981
25,998
10,705
6,836
8,449
1982
26,700
NA
NA
NA
Plan 1985
36,000
15,200
9,000
11,700
a Production includes exports, fertilizers, and nitrogen and phos-
phate animal feeds and also probably covers some fertilizers used for
industrial purposes. Totals generally include small quantities of
trace fertilizers. Data on fertilizers supplied to agriculture are
unadjusted for losses.
b Data on phosphate fertilizers include ground phosphate rock used
for direct application.
Source: All data except those for the 1985 plan are from Narodnoye
khozvavstvo SSSR (various years).
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Table A-4
USSR: Fertilizer Exports
Total b
481
1,775
2,050
2,206
2,449
2,881
3,002
2,952
3,304
3,297
2,890
3,908
3,593
Phosphate (P,O,)c
54
135
109
95
92
97
101
101
119
134
121
134
143
Potash (K2O)
343
1,309
1,622
1,706
1,997
2,321
2,490
2,316
2,506
2,401
1,986
2,747
2,182
Nitrogen(N)
84
331
319
405
360
463
411
535
678
763
783
1,027
1,268
Of which:
Ammonium
sulfate
68
181
167
187
178
179
144
186
214
236
217
217
225
Ammonium
nitrate
3
47
35
49
36
36
37
37
38
50
40
58
45
a Nutrient values are estimated from official Soviet foreign trade
data on fertilizers using the following assumptions concerning
average nutrient content: phosphate fertilizers, 18.7 percent P2O,;
potash, 41.6 percent K2O; ammonium sulfate, 20.5 percent N;
ammonium nitrate, 34 percent N; and urea, 46 percent N.
b Because of rounding, components may not add to the total shown,
c The Soviets do not report the small quantities of ammonium
phosphate exports to East European countries.
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Table A-5
USSR: Estimates of Capacity Utilization
in the Fertilizer Industry
New Capacity
Estimated a
Total Production
Capacity Use
Installed
Total Capacity
(Percent)
(Standard Units)
(Standard units)
Standard Units
Nutrients
1955
NA
NA
9.7
1960
NA
17-17 b
13.9
3.3
82-82
1961
c
0.9
17.1-17.9
15.3
NA
89-85
1962
-
.
2.0 ~
18.3-19.9
17.3
1963
7.4
24.9-27.3
19.9
4.6
80-73
1964
6.3
30.4-33.6
25.6
6.0
84-76
1966
3.4
38.9-43.7
35.9
8.4
92-82
1967
3.3
41.4-47.0
40.1
9.4
97-85
1968
5.2
45.8-52.2
43.5
10.2
95-83
10.8
81-72
13.1
84-75
22.6
1977
4.0
109.3-122.9
96.8
23.5
1978
2.2
110.7-125.1
98.0
23.7
1979
15.8
125.7-140.9
94.5
22.1
1980
9.9
134.8-150.8
103.9
1981
2.1
136.1-152.9
109.1
87-78
89-79
89-78
75-67
a The upper end of the range of estimates of total capacity is based on Sources: Unless otherwise indicated data are from Narodnove
an absence of retirement of any of the 17 million tons in place at the khozyaystvo SSSR (various years) and Soviet sources cited by Philip
end of 1960; the lower range, on a linear rate of retirement required Hanson, Trade and Technology in Soviet-Western Relations, New
to retire all 17 million tons by the end of 1981. York, 1981 p. 167.
b Estimated by Philip Hanson, Trade and Technology in Soviet-
Western Relations, New York, 1981, p. 167.
Estimated by CIA.
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Appendix B
USSR: Contracts for Purchase of Fertilizer
Equipment and Technology From
Non-Communist Countries, 1971-81
Year of Type of Plant
Contract or Equipment
1973 Ammonia plant equip-
ment: pipes, valves, mo-
tors, instruments, and
electric machinery
Production
Capacity
Exporter
(thousand tons
per year)
Country
Toyo Engineering
Corporation
NA
Japan
Toyo Engineering
Corporation
1974 Electric vibrating
screens for fertilizer pro-
duction
Plant Sites
and Comments
Scheduled
Completion
Date
Contract covers only main NA
machinery and equipment.
Plant designs may be similar
to some provided earlier by
US firm.
Equipment may be for three NA
plants, each with a capacity
of 450,000 tons per year.
Snamprogetti ENI Novomoskovsk. Contract 1978
covers design, engineering,
procurement, and assistance
with startup. Buy-back in-
volves Italian counterpur-
chase of Soviet ammonia and
possibly urea. See comment
on 1975 Soviet order for two
urea plants.
Tecnimont Gorlovka. Compensation ar- 1978
Montedison rangement involves purchase
of Soviet ammonia by
Montedison over a 10-year
period starting in 1978.
1974
Ammonia storage
NA
France
Constructions Metal- Gorlovka
equipment
liques de Provence
1974
Urea-handling equip-
NA
West Germany
Pohlig-Heckel- Odessa. Equipment for stor-
ment
Bleichert Vereinigte ing and loading urea.
Maschinenfabriken
AG
1974
Two fertilizer-handling
NA
United States
Occidental Petroleum Odessa area and Ventspils.
facilities a
Contract covers design and
construction of handling fa-
cilities at two ports. Product
buy-back (ammonia) by Occi-
dental is apparently involved.
NA
1977
United States Dresser Industries Most of the compressors will NA
be used in production of am-
monia.
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USSR: Contracts for Purchase of Fertilizer (Continued)
Equipment and Technology From
Non-Communist Countries, 1971-81
Year of Type of Plant Production
Contract or Equipment Capacity
Exporter
(thousand tons
per year)
Country
1974
Installation for storage, 60 (storage)
cooling, and transport
of ammonia
France
1974
Ammonia (four plants) a 1,800 total
France
United Kingdom
Japan
United Kingdom
Firm
and Comments Completion
Date
Constructions Metalli- Tol'yatti. Storage and load-
ques de Provence ing equipment will serve rail
(CMP) tank cars and pipeline
facilities.
Creusot-Loire
Kellogg International
Mitsubishi
Doulton Industrial
Products
1975 Urea (two plants) a 1,000 total Italy ENI
Snamprogetti (an
ENI subsidiary)
lourec S.A. (to supply
pipe), Sofregaz
(consultant)
United States Occidental Petrole-
um, Williams Bros.
(design consultant),
Mapco Inc. (consul-
tants)
Two plants at Gorlovka and End of 1977
two at Odessa. Repayment in
part by shipment of ammonia
to France beginning in 1978.
Mitsubishi will supply four
turbine compressors for $3.5
million of the contract value,
and Doulton will supply fil-
tration equipment for
$178,800.
Tol'yatti. Chemico will de- 1978
sign and engineer plants and
obtain materials and equip-
ment. All equipment is to be
purchased in the United
States. Financing by US Ex-
port-Import Bank and US
private banks. Compensation
deal involving purchase of
600,000 tons/yr of Soviet
ammonia for 10-year period
by Occidental Petroleum
Corp. The 600,000 tons/yr
may also cover ammonia to
be purchased in connection
with Soviet order of fertilizer-
handling equipment at two
Soviet ports.
Both plants to be at Tol'yatti. 1977
Buy-back agreement also
covers a Soviet order for a
urea plant in 1974. Italian
firm, Anic, to purchase
100,000 tons of Soviet ammo-
nia annually over a 10-year
period starting in 1979.
Agreement may also call for
Italian purchase of urea.
Involves French credit of 1978
about $230 million. Compen-
sation deal. Occidental to
make counterpurchases of
ammonia. The 2,400-kilome-
ter pipeline, which has a ca-
pacity of 2.5 million tons of
ammonia per year, includes a
300-kilometer branch line to
Gorlovka.
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USSR: Contracts for Purchase of Fertilizer (Continued)
Equipment and Technology From
Non-Communist Countries, 1971-81
Year of Type of Plant Production Exporter Plant Sites Scheduled
Contract or Equipment Capacity and Comments Completion
(thousand tons Country Firm Date
per year)
1975 Ammonia (four plants) a 1,800 total Japan Mitsui and Company Cherepovets, Novgorod, Dne- 1979
Toyo Engineering prodzerzhinsk, and
Corporation Dorogobuzh.
1976 Urea (two plants) a 1,000 total Italy Tecnimont Berezniki, Kemerovo. Com-
Montedison pensation deal. USSR will
supply 250,000 tons/yr of
ammonia to Montedison for
10 years beginning in 1978.
1976 Ammonia (four plants) 1,800 total Japan Toyo Engineering Grodno, Rossosh, Novomos- 1980
Corporation, Mitsui kovsk, Cherkassy. Plants will
and Company use Pullman Kellogg technol-
United States Pullman Kellogg ogy.
1976 Multinutrient liquid fer- 2,000 total France Azote et Produits Ventspils, Rovno, Sumy, 1979
tilizer (seven plants) Chemiques PEC Cherkassy, Voskresensk, Ye-
Engineering fremov, Belorechensk. Plants
are designed to use super-
phosphoric acid to be sup-
plied by US Occidental Cor-
poration.
1976 Ammonia plant 450 Japan Toyo Engineering Perm' Plant will use Pullman 1980
Corporation Kellogg technology.
United States Pullman Kellogg
1976 Urea plant 500 Japan Toyo Engineering Mitsui Toatsu will supply 1980
Corporation technology.
Mitsui Toatsu
1976 Potassium chloride plant 1,100 France PEC Engineering Soligorsk. Vacuum installa- 1979
United States Swenson tion of potassium chloride.
Swenson will supply technol-
ogy.
1976 Multinutrient fertilizer 1,200 total Japan Toyo Engineering Both plants to be at Novgo- 1979
(two plants) Corporation rod. Norsk Hydro will supply 1981
Norway Norsk Hydro technology.
1976 Multinutrient fertilizer 2,400 total a France Speichim, Rhone Meleuz, Belorechensk, 1980
(three plants) Poulenc, Pechiny- Novyy Rozdol. Rhone Pou-
Ungine Kuhlman lenc and Pechiny-Ungine
Kuhlman will supply technol-
ogy. Compensation deal un-
der a Rhone-Poulenc agree-
ment. USSR will supply
chemicals and oil.
1976 Phosphoric acid (four 1,200 P2O5 total Belgium Coppee Rust Chereporets (2), Meleuz, 1978-79
plants) Belorechensk. Plants will
use Prayon technology.
1976 Centrifuges to chemical West Germany Kraus-Maffei AG NA
and fertilizer plants
1976 Shovel loaders for potash
mines
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USSR. Contracts for Purchase of Fertilizer (Continued)
Equipment and Technology From
Non-Communist Countries, 1971-81
Year of Type of Plant
Contract or Equipment
1976 Graphite heat exchang-
ers for phosphoric acid
plant (eight exchangers)
Production
Exporter
Plant Sites
Scheduled
Capacity
and Comments
Completion
(thousand tons
Country
Firm
Date
per year)
165 P2O5
Japan
1977
Pumps for 14 stations on NA
Tol'yatti-Yuzhnyy am-
monia pipeline
1977
Spare parts for potash NA
mining machinery
1977
Phosphoric acid 400 P2O5
(three units)
France
United Kingdom
Spie Batignolles SA
Swenson and Swift
1977
Ammonia plant 450
Japan
United States
Mitsui and Company
Toyo Engineering
Pullman Kellogg
1977
Denitrification units NA
Japan
Mitsui Toatsu
Chemicals
1977
Potassium chloride crys- 1,425
tallizer
France
Soc. Francaise Whit-
ing Fermont, Mines
de Potasse d'Alsace
1977
Phosphoric acid plant a 165 P2O5
France
Krebs et Cie, Rhone
Poulenc
1977
Multinutrient fertilizer 1,830 total
(three plants)
Japan
Norway
Toyo Engineering,
Mitsui and Com-
pany
Norsk Hydro
1977
Ammonia (10 plants) 4,500 total
Japan
Toyo Engineering,
Mitsui and Company
Voskresensk, Balakovo. Units 1979
are for concentration of 28
percent acid to 54 percent
acid. Swenson and Swift will
supply technology.
Angarsk. Plant will use 1980
naptha feedstock. Pullman
Kellogg will supply
technology.
Novgorod. Units will be used NA
in multinutrient fertilizer
plants supplied by Toyo Engi-
neering.
Soligorsk. Mines de Potasse 1978
d'Alsace will supply
technology.
Compensation deal under 1980
Rhone Poulenc agreement.
USSR will supply raw mate-
rials. Rhone Poulenc will sup-
ply technology.
Rossosh (2), Dorogobuzh. 1981
Norsk Hydro will supply
technology and some equip-
ment.
Berezniki, Tol'yatti (3), By 1981
Rossosh, Salavat, Kirovo-
Chepetsk, Kemerovo (2),
Fergana. Japan will supply
main equipment (compres-
sors, coolers, etc.) Czechoslo-
vakia will supply reformer
sections. Soviets will supply
technology and some equip-
ment.
1977 Valves for ammonia NA Japan Matsuura Koatsu NA
plant Machinery Company
NA
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USSR: Contracts for Purchase of Fertilizer (Continued)
Equipment and Technology From
Non-Communist Countries, 1971-81
Year of Type of Plant Production Exporter Plant Sites Scheduled
Contract or Equipment Capacity and Comments Completion
(thousand tons Country Firm Date
per year)
1978 High-pressure fittings NA Japan Mitsui and Company NA
for plants producing
fertilizers
1978 Ammonia plant control NA United States NA
modules
1978 Heat exchangers for NA Sweden Alfa-Laval AB NA
phosphoric acid plant
1981 Potassium chloride 2,000 West Germany Lurgi Umwelt Berezniki. Contract covers 1984
plant Chemotechnik equipment for crystallization,
GmbH classification, compaction
and granulation of potash ore
and other equipment includ-
ing trucks and lifting equip-
ment.
- Items represent purchases that involve or may involve "Compensa-
tion" arrangements (that is product buy-back .
taken from reports in Western press and journals
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Appendix C
The Soviets claim that they have one-third of the
world's prospected reserves of phosphate raw materi-
als. The USSR ranks second to the United States in
phosphate rock production-1980 output amounted to
25.5 million tons. The two main sources of phosphate
rock in the USSR are the Kola mines in the far north
of the European USSR and the Karatau mines in
southern Kazakhstan. The Kola mines supply over
three-fourths of domestic output in the form of apatite
concentrate, while the Karatau mines provide most of
the rest mainly via the elemental phosphorous route.
A number of small deposits are mined in the Europe-
an USSR to supply ground phosphate rock for direct
application. Kola apatite concentrate is of very high
quality, containing 39.4-percent P2O5. Karatau pro-
duces three types of products, mainly 23-percent P2O5
ore for thermal reduction to elemental phosphorus,
but also some ground phosphorite and phosphorite
concentrate (28-percent P2O5) for acid concentration.
According to a Soviet journal, reserves increased by
2.7 billion tons or by almost 50 percent during
1971-75 and continued to increase during 1976-80.
The USSR is short of high-quality reserves, however.
Most of the deposits discovered in recent years have
been relatively small and have a low P205 nutrient
content. The agreement with US Occidental Corpora-
tion, which will supply SPA to the USSR until 1997,
buys the Soviets time to develop poorer quality ore
deposits in more remote locations.
In 1980 about 25 percent of phosphate ores used in
the production of phosphate fertilizer were low-nutri-
ent ores. This share will become even larger in the
1981-85 plan period, limiting future development of
phosphate fertilizer. For example, the Kola apatite
mines are running low on high-quality reserves (see
table C-1).
Table C-1
USSR: Apatite Production
in the Kola Peninsula
1960 1965 1970 1975 1978 1980 1985
Plan
Investment in the Kola apatite mines in 1981-85 is to
reach 425 million rubles, nearly 60 percent of the
funds allocated for the Chemical Mining Industry
(Soyuzgorkhimprom) phosphate mines. Current plans
for expansion in the 1980s call for the completion of a
new open-pit mine with an annual capacity of
7 million tons and a third concentrate plant with an
annual capacity of 8.8 million tons. The first stage of
this concentrator, with an annual capacity of 2.4
million tons, is scheduled to begin operation in 1984
and is designed to beneficiate poor-quality apatite-
nepheline ores.
A new apatite recovery line that went into operation
at the end of 1981 at Kovdor will produce 440,000
tons of concentrate per year, almost doubling output
at this site. The apatite, which is recovered from
tailings of an iron ore beneficiation plant, is not
popular with the fertilizer industry because of its high
concentration of metals. It is mainly used for defluor-
inated phosphate feeds.
" Data in this section is based on Soviet and Western open
literature.
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Mining capacity of phosphorite at the Karatau-
Dzhambul complex is scheduled to double during the
current five-year period to 18.5-20 million tons of ore.
The second underground phosphorite mine is expected
to begin production in 1984. At present only
57 percent of the mining capacity is utilized, and
delays in the development of this complex are likely to
continue into the mid-1980s. Lack of sintering or
pelletizing facilities have prevented proper prepara-
tion of the ore, thus preventing full use of the
capacity. Future development of the complex will
depend also on the availability of electric power. The
new South Kazakhstan thermal power station, now
under construction, will not be completed until after
1985.
During 1981-85 the Soviets plan to produce phospho-
rite concentrate on the basis of the Chilisay (Kazakh-
stan) deposits and to begin building an apatite plant at
Oshurkovo in Buryatiya. Nearly 100 million rubles
have been earmarked for investment in the Chilisay
mines in 1981-85. Progress at Chilisay has been slow,
however, and construction of the mine and beneficia-
tion plant to produce 1.77 million tons of concentrate
per year is likely to continue throughout the current
five-year period. At Oshurkovo an experimental bene-
ficiation plant was commissioned in 1980, but full-
scale operation to produce 700,000 tons of concentrate
per year is not expected until after 1985.
During 1986-90 new phosphate raw material facilities
may be developed at the Seligdar deposits in southern
Yakutia, where the Soviets estimate reserves of 1.6
billion tons of phosphate ore. The Soviets recently
reported the discovery of phosphate deposits at Rak-
vere in Estonia and in the Karelian ASSR, and plans
are being made to exploit the Estonian deposit. Soviet
geologists prospecting the Hobsogol phosphate depos-
its in Mongolia, which were thought to be a potential
source, found the ores to be of low quality, but a
phosphorite deposit near Erdenet in Mongolia is
currently under evaluation.
We estimate that in 1985 the USSR probably will
have about 7 million tons of PZOS from domestic
supplies and will import about 1 million tons. Al-
though domestic supplies of phosphates will increase
throughout the 1980s, they probably will not cover
anticipated domestic requirements. The Soviets, how-
ever, have other sources of supply. Implementation of
the agreement with Morocco could provide up to 10
million tons of phosphate rock after 1990 and smaller
amounts in the last half of the eighties. Furthermore,
the Soviets could, in a pinch, expand purchases of
phosphoric acid and finished phosphate materials on
world markets.
Sulfur is needed to produce sulfuric acid, a major
input to phosphate fertilizers. Soviet output of sulfur
in all forms, second to that of the United States,
reached about 11 million tons in 1980. Nonetheless,
sulfur is in short supply in the USSR, and domestic
output probably will not satisfy requirements through
1985. Production costs are rising because of the need
to process lower grade ores and because of the higher
energy costs associated with the melting of sulfur
underground. During 1976-80 costs in the Soyuzsera
sulfur mining group rose by 31 percent. Production at
the Gaurdak, Rozdol, and Yavorov sulfur mines is
being expanded during 1981-85.
Because there are few large reserves of sulfur suitable
for mining, the Soviets will turn increasingly to
recovery of sulfur or sulfur-containing materials from
sour gas, oil, metal smelters, and possibly coal. Sulfur
available from these sources accounts for about one-
third of output, but substantial quantities are current-
ly being wasted. An increasing amount is being
recovered from natural gas with a high sulfur content.
More than 1 million tons of sulfur is obtained annual-
ly from the Orenburg gasfields. In 1981-85 the Sovi-
ets plan to increase sulfur recovered from natural gas
by 25 percent. Sulfur recovery from the Mubarek
gasfields in Uzbekistan is expected to increase
50 percent, to about 750,000 tons annually. A con-
tract was recently signed with a French firm for the
construction of a gas treatment and sulfur extraction
complex at Astrakhan. The project, scheduled for
completion in 1985, will provide nearly 3 million tons
of sulfur annually. By 1990, Soviet sulfur production
could be raised to about 14 million tons.
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Although Poland now provides about 7 percent of
Soviet sulfur consumption, large increases in deliver-
ies from this source are unlikely. The USSR pur-
chased smaller amounts of sulfur from Canada and
the United States in 1981 and from Canada and
Mexico in 1982.
Ammonia, the major input to nitrogen fertilizer, is
largely based on natural gas feedstock. In 1980 the
share of ammonia produced from natural gas was
about 90 percent, compared with 80 percent in 1975.
The rest is obtained from coke oven gas and coke and
coal. The USSR has large reserves of natural gas that
can easily support the estimated level of ammonia
production. In 1980 about 4 percent of natural gas
output was used as feedstock for ammonia production.
We project natural gas output, which grew 50 percent
during 1976-80, to increase by about 37 percent to
590-600 billion cubic meters in 1981-85 and possibly
to 710-730 billion cubic meters in 1990.
The USSR, the world's largest producer of potash
fertilizers, has enormous reserves of the requisite
inputs-potash salts-totaling nearly 4 billion tons of
K2O. Two major centers of potash production are in
the western Urals and in Belorussia, and a smaller one
is in the western Ukraine. The Belorussian mines,
which account for about half of Soviet potash output,
are well located to supply an important area of the
domestic market, as well as Eastern Europe. Urals
potash has to be shipped over longer distances to
domestic users and, although produced in the interior
of the country, has been the main product supplied to
Western markets.
Despite the deterioration of the quality of the Urals
concentrate and the technical and transportation diffi-
culties cited previously, the long-range outlook for
Soviet potash is favorable. Future production growth
should provide for both domestic consumption and
larger exports. Utilization of present capacity can be
increased, and improved mining and ore-concentrat-
ing technology should permit a reduction in the large
losses now experienced in mining and processing ores.
The Soviets plan to increase potash capacity by about
6.5 million tons of K2O in 1981-85, but this expansion
is more likely to carry over into the latter half of the
decade. The Uralkali complex in Perm' Oblast-
which includes mines at Berezniki and Solikamsk-
will provide most of the scheduled new capacity.
The Berezniki 4 mine ultimately will have a capacity
of about 3 million tons of K2O. At the Solikamsk mine
an initial capacity of 700,000 tons of K2O per year
is expected to increase gradually to nearly
3 million tons per year. Expansions at the Belaruska-
liy Production Association in Soligorsk, Belorussia,
are scheduled to provide eventually about 2.5 million
tons per year of K2O. Since 1979 capacities for about
1.6 million tons per year have been added, and
capacity for 830,000 tons per year is planned for the
Soligorsk 4 mine. Additionally, promising deposits in
northern Irkutsk Oblast and in the Turkmen SSR
may be exploited in the latter half of the decade.
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Appendix D
Outlook for 1990
Moscow has not announced a fertilizer production
plan for 1990. At the CPSU Central Committee
Plenum on the Food Program in May 1982, Brezhnev
revealed plans to deliver 30-32 million tons of fertiliz-
er nutrients to agriculture for crops in 1990. This
would imply production of about 38-41 million tons of
nutrients-an increase of only 7 to 14 percent over
planned output for 1985-if, as during the 1970s,
78 percent were allocated for crops. Alternatively, if
the share of output allocated for crops were the same
as that planned for 1985, production would be about
41-43.5 million tons, a 14- to 21-percent increase over
1985. In addition, agriculture is to receive 1.2 million
tons of chemical feed additives.
According to current information on the planned
construction of ammonia plants, capacity for an addi-
tional 3.3 million tons of ammonia (equivalent to
2.7 million tons of nitrogen) may be built during 1986-
90, bringing total ammonia capacity to more than
32 million tons. Further gains in phosphate fertilizer
production in the last half of the decade will depend
primarily on raw material availability. Facilities at
Chilisay and Oshurkovo, which are already being
developed, could provide an additional 2.5 million tons
of concentrate. Expansion of potash facilities could
raise output to 11-12 million tons of K20.
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