Russian fertilizer makers have largely escaped sanctions, despite their importance for revenues, the provision of war materiel, and strategic leverage. There are no sanctions on products entering the US, and the European Union (EU) only imposed curbs in mid-2025.
As a result, the Russian fertilizer industry has enjoyed a booming export market in the EU and US since the full-scale invasion of Ukraine. At the same time, the Kremlin’s manipulation of European gas supply has devastated EU manufacturers, enhancing opportunities for exporters.
And the proprietors of these businesses, such as Ultrachem’s Dmitry Mazepin and Eurochem’s Andrey Melnichenko, are not neutral businessmen. They are close to the Russian leadership, have been personally sanctioned by the EU, and provide vital explosives for the war.
Russia’s fertilizer industry has become a major economic and military security threat, which Western allies need to tackle.
At the time of the full-scale invasion, neither the EU nor the US wanted to impose sanctions on Russian fertilizers for fear of pushing up food prices domestically and in the developing world. While this policy appeared reasonable, it overlooked Moscow’s capacity to manipulate the market to its advantage.
In the run-up to the invasion, and then into the war, Moscow was progressively withdrawing natural gas from European markets, forcing prices to reach an astronomical €340 ($390) per megawatt hour in August 2022.
Even though EU governments spent more than €500bn in subsidies and support to protect consumers and industry, the price rise had a massive impact on the continent’s fertilizer production. Natural gas is the primary feedstock for ammonia, and ammonia makes up 70%-90% of the cost of producing nitrogen fertilizer.
As there were no sanctions on Russian fertilizer imports, and it had lots of spare natural gas, its fertilizer exports boomed. All the major categories of nitrogen fertilizers surged into the EU after 2022, with a 27% increase in nitrogen fertilizer, a doubling of nitrogen mixer fertilizer, and Russia became the principal supplier of ammonia to the bloc.
A significant part of Europe’s fertilizer industry went permanently out of business, and approximately 70% of the continent’s production was temporarily shuttered by the gas price surge between 2021 and 2023.
In 2025, the EU did eventually impose a progressively increasing tariff on Russian fertilizers, and in 2026 its ammonia exports to the EU were also restricted.
The most significant EU measure impacting fertilizer imports, however, is not the sanctions regime, but the Carbon Border Adjustment Mechanism (CBAM). It came into full force in January and hits all types of nitrogen fertilizer with increasing charges because they are sourced from fossil fuels.
While the EU has belatedly imposed limits on Russian fertilizers, the US has no sanctions regime in place. In 2022, the Treasury’s sanctions office, OFAC, even issued a notice reassuring importers that Russian product would not be sanctioned.
The real bonanza occurred when Washington imposed wide-ranging tariffs on US trading partners in April 2025. While President Trump’s tariffs hit the principal exporters of fertilizers to the US, these were not applied to Russian fertilizers.
This was because the US had already punished Russia by removing its Most Favoured Nation (MFN) status. However, while MFN was a trade sanction on Russia, it left products like fertilizer and ammonia to enter the US tariff-free.
Russia suddenly had a significant competitive advantage over other exporters, resulting in a major fertilizer export surge into the US. This lasted until February, when Washington removed tariffs for almost all fertilizer imports.
The US did, however, sustain tariffs against Canadian potash fertilizer, meaning the Russian potash industry still has a significant edge.
And there is a direct link between the Russian fertilizer industry and the war. Fertilizer plants manufacture the industrial acids and nitrogen intermediates needed to make high explosives.
A series of investigations by Reuters, Bloomberg and the Ukrainian NGO Nako, in its Crops and Bombs reports, identified the immense scale of the fertilizer-to-explosives operation. The industry is currently expanding to produce more explosives, underpinning Russia’s capacity to wage war.
The two most significant suppliers of explosives to the Russian military appear to be Uralchem and Eurochem, both of which are controlled by men close to the Kremlin.
Uralchem’s Mazepin is in Vladimir Putin’s “close circle,” according to the EU General Court, and that proximity to power was underlined when he used state machinery to take over Togliattiazot, another major fertiliser producer, in a classic post-Soviet corporate raid.
Melnichenko, who controls EuroChem, is also close to the Russian leadership, and attended a meeting of business leaders in the Kremlin on the first day of the full-scale invasion. He also used an article in the Economist to call for Western understanding of Moscow’s interests.
While supplies are important, the West cannot permit Russia to use its fertilizer sector to increase revenues and aid Moscow’s war effort by strengthening its capacity to produce explosives.
The US/Israeli war on Iran has also demonstrated that if fertilizer suppliers are blocked, other countries will step in to fill the gap. While shipments of urea through the Strait of Hormuz fell by 85% as a result of the war, Egypt and Nigeria almost doubled exports, leaving a shortfall of just 6%, the FT reported. [TP1]
The US is well-placed to replace Russia. It has plenty of cheap natural gas and could become the lynchpin of a Russian fertilizer suppression strategy, preserving access to markets, keeping prices low and progressively removing Russia from the market.
Professor Alan Riley is a visiting professor at the College of Europe, Natolin, Warsaw. He has recently published a major paper with the Harvard Ukrainian Research Institute on the Russian fertiliser sector entitled Closing the Fertiliser Sanctions Loophole.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
