We believe that a key to success in the potash industry, which is a commodity industry, is to maintain low costs.

In order to maintain our cost leadership going forward we have developed a number of cost reduction programmes addressing all three major cost components.

First we intend to enhance the efficiency of our production processes as part of our cost savings initiatives. Uralkali has established a new subsidiary, LLC Uralkali Engineering, with a highly regarded German engineering company. The subsidiary intends to use modern technological solutions in the execution of modernization and the de-bottlenecking process.

Other important elements of Uralkali's cost savings initiatives include the planned outsourcing and restructuring of the repair and maintenance function so as to reduce Uralkali's headcount in the repair and maintenance department and also in other departments. Uralkali has outsourced the repair and maintenance of certain electrical production equipment and has outsourced repair and maintenance of its main production plant and equipment when it was commercially advantageous to do so. Uralkali believes this work will in the future be capable of being done more cost effectively by external service providers.

Uralkali is also in the process of implementing a power generation programme, it involves the purchase and installation of electricity generation turbines designed by Siemens which are powered by natural gas at its production facility. Uralkali intends to use the electricity and heat generated by these turbines to supply most of its demand for electricity and heat for its major production processes. We believe that additional natural gas costs will be lower than the combined electricity and heat costs would otherwise have been.