OREANDA-NEWS. October 28, 2011. Uralkali (LSE: URKA), one of the world’s largest potash producers, announces an extensive strategic investment programme. This programme, demonstrating the Company’s continuing confidence in underlying potash market dynamics, provides for the implementation of a cost effective expansion through both greenfield and brownfield development which anticipates an increase in production capacity by about 80 per cent to 19 million tonnes by 2021.

The programme includes both brownfield and greenfield expansion. As Uralkali has already announced, following the combination with Silvinit, the enlarged Uralkali portfolio benefits from substantial brownfield capacity which provides the company with the ability to add, in aggregate, 4.5 million tonnes of capacity at a highly attractive cost. These brownfield projects include 1.5 million tonnes of additional capacity at Berezniki 4, efficiency increase and debottlenecking at Berezniki-2 and 3, as well as Solikamsk-2 and -3 which will add 1.0 million tonnes in total, and a two-phase expansion programme at Solikamsk-3 increasing its capacity by 2.0 million tonnes.

In addition, the Company believes that the combination of positive factors impacting potash market dynamics over the next ten years provides the opportunity for the Company to move forward with the development of both the Ust-Yayvinsky and Polovodovsky greenfield projects which will provide the company with additional capacity of 5.3 million tonnes 1.

Total investment in Uralkali’s expansion programme will amount to USD 5.8 billion by 2021 including USD 0.7 billion for Berezniki-4 expansion, USD 0.2 billion for efficiency increase and debottlenecking programme, USD 1.0 billion for Solikamsk-3 expansion, USD 1.6 billion for the Ust-Yayvinsky project, and USD 2.4 billion for the Polovodovsky project.

The weighted average cost of the brownfield and greenfield expansion programme will amount to approximately USD 420 per tonne and approximately USD 750 per tonne of additional capacity respectively, which the company believes being the most cost effective in the potash industry. The new greenfield projects are located in the immediate vicinity to Uralkali’s current operations which benefit from attractive geology, allows the company to use the existing infrastructure and leverage existing mining expertise. Uralkali’s mines are situated at moderate depth with potash containing seams developed at the level of 300-450 metres below the ground.

Uralkali expects to finance the strategic investment programme through a combination of anticipated free cash flow and loan facilities, in line with the previously announced medium term goal of keeping net debt to a range of 1.0x – 2.0x LTM EBITDA.

Vladislav Baumgertner, Uralkali CEO:

“The adoption of a carefully structured development programme is integral to the ability of the Company to fulfill its growth potential in the context of attractive market dynamics. This programme represents an important milestone for Uralkali post the successful combination with Silvinit which will allow us to nearly double our production capacity over the next decade and secure our leadership position. Our long-term growth strategy aims to satisfy the constantly growing demand for potash, better serve our customers and increase value for our stakeholders. With our unrivaled expansion programme we offer the fastest and most cost-effective solution to exploit the market opportunity as our brownfield and greenfield projects are, we believe, substantially less expensive than the industry average. Moreover, our long-term commitment to a socially responsible development strategy ensures financial and social prosperity for our employees, local community and in general the region where we operate”.