Uralkali and Silvinit Enter into Agreements with Russian NPK Producers

OREANDA-NEWS. December 31, 2010. Uralkali has signed agreements with compound fertilizer producers JSC Acron and JSC Dorogobuzh (members of Acron Group) to supply muriate of potash (MOP) linked to the minimum export price. The agreements are made in compliance with the Non-Discrimination Access to MOP Acquisition Rules and will be valid from 1 January 2011 to 1 January 2014. In 2011, Uralkali will supply 300 thousand tonnes of MOP to Acron and 150 thousand tonnes to Dorogobuzh. Subject to options, the total amount of supplies may reach 315 thousand tonnes and 157,5 thousand tonnes, respectively.

Also Uralkali has been informed that Silvinit has entered into agreements with JSC Minudobreniya (Rossosh) and JSC Acron about supplies of MOP in 2011-2013. According to contracts, in 2011 Silvinit will supply 301,5 thousand tonnes of MOP to Minudobrenaya and 16 thousand tonnes of MOP to Acron.

In November 2010, the Federal Antimonopoly Service of Russia distributed the Non-Discrimination Access to MOP Acquisition Rules to mineral fertilizer producers. Under the Rules, from 1 January 2011 to 1 January 2013 MOP producers are advised to supply their products to Russian compound fertilizer producers at the minimum export price, with its level to be adjusted every quarter. In Q1 2011, subject to a number of discounts, the minimum export price will be around 5,700 roubles per tonne (FCA, net of VAT, unpackaged).

The agreements provide for premiums on a portion of supplies from 1 January 2011 to 1 January 2013, to support Russian agricultural producers. The mechanism of premiums will allow compound fertilizer producers to buy muriate of potash to produce fertilizers for the domestic market on the same preferential terms that apply to agricultural producers. The structure is designed to encourage the growth of compound fertilizer supplies to the domestic market.

Uralkali has previously announced the signing of long-term agreements with Eurochem and Phosagro. Silvinit has previously announced the signing of long-term agreements with Uralchem, Eurochem, Phosagro and Meleuzovskiye Mineral Fertilizers. Thus, Uralkali and Silvinit have signed agreements with all major Russian NPK producers under the Non-Discrimination Access to MOP Acquisition Rules. Needs of these companies, and also of the Russian agricultural manufacturers for MOP in 2011 will be completely satisfied.

The maximum volume of supplies of MOP to the Russian NPK producers in 2011, thousand tonnes*:

*The supply volumes can vary depending on market conditions.

**Total volumes don't include supplies to agricultural producers and industrial producers.