Investing in the future

Uralkali maintained its leading position in the global industry in 2015 despite a decline in buying activity. The Company produced 11.4 million tonnes of potash, 6% less than in the previous year. The incident at Solikamsk-2 in November 2014 reduced available capacity, but this effect was offset and actual production surpassed projections for 2015 thanks to the optimisation and increased capacity utilisation at the Company’s other production facilities.

In Q1 2015 Uralkali approved a capacity development programme that involves investment of about US$4.5 billion and capacity expansion to 14.4 million tonnes a year by 2020. Taking into account the Polovodovsky project, which is currently at the design stage, production volumes may reach 17.2 million tonnes per year. Maximum production capacity for 2016 is estimated at 12.2 million tonnes.

The Company plans to realise its investment programme in accordance with the current market conditions and expected changes in the potash market.

The revised programme includes projects to ensure trouble-free operation and increase the load on the production lines of Berezniki-3 and Berezniki-4; complete the fourth shaft at Solikamsk-3; construct new shafts at Solikamsk-2; construct the Ust-Yayva block and expand granular potash capacity.

The current Solikamsk-2 mine continues to operate in order to enable backfilling of worked out areas. To replace the decreasing capacity of Solikamsk-2, the Company plans to commission a new mine with capacity of 2.3 million tonnes. At the same time, work is underway at Solikamsk-3, which is expected to reach capacity of 3.3 million tonnes in 2018.

The Company also continued the construction of a new mine at Ust-Yayva. The Ust-Yayva mine will replace the decommissioning of Berezniki-2, the reserves of which will be depleted after 2022. Starting from 2020, the capacity of the Ust-Yayva mine will be gradually increased to 2.5 million tonnes a year. The potash ore mined at Ust-Yayva will be processed at Berezniki-3. The flow of ore from Berezniki-4 will be redirected to Berezniki-2 instead of Berezniki-3.

As part of the Polovodovsky project, which may increase the Company's capacity by 2.8 million tonnes, survey work was performed last year and design documentation for the main facilities was developed.

The Company also executes capacity maintenance projects.

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The investment programme is revised on an annual basis in accordance with market conditions and capacity utilisation.

Уралкалий



Expansion projects Project capacity
(mln t KCl)
Planned investment
(US$ mln)
Commissioning
Berezniki-3, 4: load increase 0,8 87 2016
Ust-Yayva project 2,5 1 191 2020
Solikamsk-3 expansionoject 0,6 135 2017
Polovodovsky project 2,8 1 905 After 2020
Solikamsk-2 (new mine) 2,3 723 2020

1 The expected life of Solikamsk-2 mine depends on the brine inflow and the demand for backfilling of worked out areas.

2 Decrease in capacity by 0.4 million tonnes is caused by depleting capacity at Berezniki-2 mine starting from 2019.

3 Replacement of decrease in capacity at Berezniki-2 mine and additional capacity of 0.5 million tonnes at Berezniki-3 due to additional ore from Ust-Yayva.

4 Complete replacement of capacity of Berezniki-2 mine (1.5 million tonnes).

5 Replacement of existing mine Solikamsk-2, the commissioning deadline may be extended to 2022, according to the mining schedule.



In Q1 2015 Uralkali approved a capacity development programme.

Уралкалий
Increasing load
at Berezniki-3,4

In 2015, project work included technology stabilisation at Berezniki-4. 90 dump cars were purchased to transport ore to Berezniki-3. In total, 20 out of 48 activities at Berezniki-4 were completed, including the installation of new condensers, furnaces and thickeners.

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Solikamsk-2
(new mine)

Construction of a new mine with two shafts to mine the remaining reserves at Solikamsk-2 processing facility started in 2015. It will help to safely mine the remaining reserves of the field. At the moment, the design of shafts is under way and drilling of check holes has been completed. The contractor has been selected and a contract was signed for construction of shafts by 2020.

Уралкалий
Ust-Yayva
project

In 2015, Uralkali proceeded with the construction of a new mine at Ust-Yayva. Shaft bottom construction of Shaft 1 was begun; tubbing is being installed at Shaft 2. The Company started the construction of the surface complex and permanent power supply facilities. Work on the road to Berezniki-3 was completed.

Уралкалий
Solikamsk-3
expansion

The Company restored the constructed part of Shaft 4, developed surface complex documentation, ordered winding machines and headframe, and began preparatory work required for shaft sinking.

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Polovodovsky
project

The development of design documentation for the main facilities is now in the final stages. Drilling of check holes and the design of shafts has been completed. A final decision on the construction of the Polovodovsky plant will be made after the development of project documentation in 2017.