Meet the fertilizer tycoon at the heart of the Kremlin grain talks

A pipeline running from Togliatti — near the Volga River — to the Ukrainian port of Odessa, carrying ammonia produced by a Mazepin-affiliated company, has been shut down because of the conflict. Russia called for its reopening as one of the conditions for renewing a deal that has allowed more than 10 million tonnes of war-torn Ukrainian grain to cross the Black Sea to export markets since August.

The extension of the deal between Russia, the United Nations, Turkey and Ukraine, which expires on November 19, is crucial to stave off bottlenecks in global markets for grains like wheat and corn.

It is poised to be extended, with Russia’s Foreign Minister Sergei Lavrov saying the UN had assured him conditions would be met, including easing Russian grain and fertilizer shipments and allowing state farm lender Rosselkhozbank to “fully operate”. Whether that means the pipeline will reopen is not immediately clear.

The pipeline built to carry ammonia – a highly explosive chemical – poses major risks as the war in Ukraine rages on. Reopening would require a high level of confidence that it would be beneficial to the poorer world and that it would be safe, said Tim Benton, emerging risk research director at Chatham House.

“Clearly, from the point of view of global food availability ‘and price’, ensuring the export of grain from the Black Sea and fertilizer from Russia would be very positive for the world’s poorest,” he said. “However, it would help Russia’s economy a lot.”

Before the conflict, Russia was the world’s largest exporter of fertilizers. Also, Russia and Ukraine together accounted for a quarter of world grain exports. When Russia blocked Ukraine’s ports in the early months of the invasion, grain shipments by sea were disrupted, raising the specter of food shortages. The Safe Corridors Agreement struck in July allowed Ukraine to resume grain exports across the Black Sea.

Mazepin’s suffering

During the grain talks, Russia’s focus on the pipeline, the reopening of which would benefit Togliattiazot PJSC, and the requirement to release 300,000 tons of UralChem JSC’s fertilizers in European ports, had caught the country’s fertilizer industry executives by surprise. Both companies are associated with Mazepin. Representatives of Togliattiazot, UralChem and Mazepin did not respond to requests for comment.

Mazepin’s businesses are among those hardest hit by the aftermath of the invasion. He was sanctioned by Europe and Great Britain and had to give up control of UralChem and the world’s largest potash producer Uralkali PJSC. UralChem lost access to European ports, which were its main export routes. The ammonia pipeline to Odessa, Ukraine, was crucial for Togliattiazot, the producer that supplies fertilizers to Europe.

Ironically, Mazepin had only gained control of Togliattiazot shortly before the invasion, after 13 years of bitter corporate disputes, including in court. His companies first became minority investors in the company in 2008. What followed were fraud charges against Togliattiazot’s former management, which ended in their downfall, with some being sentenced to prison in absentia.

Togliattiazot’s previous owners were declared bankrupt about a year ago, and Mazepin’s firms were able to buy 71 percent of the company in two tranches in February – just days before the invasion. The acquisition increased the overall capacity of Mazepin’s business by over 30 percent, but without the pipeline it’s almost useless.

According to the Kremlin website, Mazepin was one of the last Russian businessmen to meet with President Vladimir Putin before the invasion.

The tycoon, whose net worth is estimated at $900 million by the Bloomberg Billionaires Index, also has ties to top officials. Uralkali is chaired by Sergei Chemezov, head of Rostec State Corp., with whom Putin served with the KGB in Dresden.

Born in Soviet Belarus, Mazepin graduated from military school and served as an army interpreter during the Soviet Union’s military intervention in Afghanistan in the 1980s. He started in banking, worked at oil producer TNK, and then at the Russian state real estate fund. In the early 2000s, he was briefly the head of Russia’s largest petrochemical holding company, Sibur, and helped Gazprom regain control of its assets. He then bought shares in manufacturers of ammonium fertilizers and founded UralChem in 2007.

It was not until 2013 that he entered the big leagues and took a stake in the potash producer Uralkali. As a sign of its clout, UralChem managed to secure a $4.5 billion loan from state-owned VTB for this purchase.

High stakes

In order to revive exports, the demand for the reopening of the Odessa pipeline is crucial for Togliattiazot.

When the first grain deal was concluded, parallel attention was paid to the free flows of Russian fertilizers. However, the logistical challenges of banks, insurance companies and shippers remain. And this despite the fact that the sanctions against Russia did not target the agricultural sector, since Russia plays a key role in feeding the world. While the US has reiterated that food and fertilizer are not part of restrictions, and countries in the Middle East and Asia have largely avoided penalties against Moscow, many banks in Europe are avoiding financing Russian products.

Turkey’s Foreign Minister Mevlut Cavusoglu hinted this month that reopening the pipeline could be the key to solving the grain problem. But President Volodymyr Zelenskiy said in September that any talks about the pipeline should be linked to the release of Ukrainian prisoners of war, which is a significant hurdle, said Evghenia Sleptsova Senior EM Economist, Oxford Economics.

“Zelenskiy did not offer an economic exchange, but an exchange of prisoners, which Russia flatly refused, probably because prisoners are always a good bargaining chip in future negotiations,” she said.