• Eng

Uralkali Enters into Long-Term MOP Contracts with Russian NPK Producers


Uralkali (LSE: URKA) has signed contracts with NPK producers, PhosAgro and uroChem, to supply muriate of potash (MOP) linked to the minimum export price. The contracts have been entered into in accordance with the Rules for Non-discriminatory Access to Purchasing MOP and will remain effective from January 1, 2011, until January 1, 2014. Uralkali will supply PhosAgro and uroChem with 342 thousand and 153 thousand tonnes of MOP respectively, in 2011.

In November 2010, the Federal Antimonopoly Service of the Russian Federation issued Rules for Non-discriminatory Access to Purchasing MOP to mineral fertilizer producers. The Rules prescribe that MOP producers supply their products to Russian compound fertilizer producers from January 1, 2011, until January 1, 2013, at the minimum export price, subject to quarterly revision. In the first quarter of 2011 this price with discount adjustment will be approximately 5 700 roubles per tonne (FCA, exclusive of VAT, exclusive of packaging).

Given the aim of supporting Russian agricultural producers, the contracts specify premiums to be given from January 1, 2011, to January 1, 2013, to the MOP volumes intended for the production of compound fertilizers for the domestic market. The premium mechanism allows Russian NPK producers to buy MOP to supply the domestic market under the same preferential conditions enjoyed by Russian agricultural producers. This arrangement is designed to encourage growth in the supply of NPK fertilizers to Russian agricultural producers.

Uralkali has already announced a ceiling price for the supply of potash fertilizer Russian agricultural producers in the first half of 2011. Uralkali has decided to maintain its price at the same level as that charged in the second half of 2010, that is 4,250 rubles per tonne (FCA, exclusive of VAT, exclusive of packaging).

Pavel Grachev, Uralkali President and CEO, said:

«MOP supply contracts to Russian NPK producers are now based on market pricing principles, that take into account the need to support Russian agriculture. This is a positive development for the Russian fertilizer market. The Russian Government has made a significant contribution to the successful outcome of the contract negotiation process by establishing transparent rules governing the relationships between potash producers and consumers.»

Uralkali supply and price forecasts for the domestic market in 2011 are as follows:

Consumers 2011 planned sales volume , KCl tonnes* The price per tonne, roubles

NPK producers5000005700**
Agricultural producers300004250***
Industrial producers700007150****

*The supply volumes can vary depending on market conditions.
**The price indicated for the first quarter excluding transportation charges and including discounts. This price is subject to quarterly revision and does not include the premium for the supply of NPK for the domestic market.
***The price fixed for the first half of 2011.
****The price of MOP with 98% content of K2O (FCA, exclusive of VAT, packaging).

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