Existing expansion plans will help Uralkali get back to normal production levels by 2008, according to Uralkali Director General Vladislav Baumgertner, in an interview posted on the company’s website last week (www.uralkali.com). “Last year we produced 5.4 million mt,” said Baumgertner. “This year we initially expected to produce 5.6 million mt, and 6.2 million mt next year. Taking into account that mine No. 1 shutdown means losing up to 1 million mt of products in 2007, I guess, the product output will hardly exceed 5 million mt.” He went on to say that expansion projects will allow the company to reach 2005 levels in 2008 and 7 million mt in 2009.
Baumgertner hesitated to give a cost of the actual No. 1 damage; however, he did say that lost profits would be close to $30 million in 2006. To avoid a loss of income in 2007, he said the company would need to see a 15-20 percent increase in potash prices. Major contracts are again up for negotiations at the end of 2006. With less product on the market due to the flood, and another Russian producer, Silvinit, having supplies in the flood risk zone, potash producers are now optimistic about a price increase. Add to this annual demand growth of approximately 3 percent per year and the expectations for increased corn acres in North America in 2007.
In addition to upgrades and expansions at existing facilities, Baumgertner noted that the company has a license at another site – Ust-Yaivinski, where a new facility will be built. The new facility will be designed to produce up to 4 million mt/y. He said the company will have to speed up the process in view of the loss of mine No. 1. From the interview, it did not appear there was much hope of mine No. 1 being rehabilitated, at least any time soon.