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Uralkali Board Meeting Decisions


Following a meeting held on 27 April 2011, the OJSC Uralkali Board of Directors has taken the following decisions.

Mothballing and closure of ore-treatment mill and carnallite plant at Berezniki 1

The Uralkali Board of Directors has resolved to discontinue KCI production and close the ore-treatment mill at Berezniki 1. Mothballing and further closure of the ore-treatment mill at Berezniki 1, which have been working at increased operational cost, is intended to achieve the company’s strategic goal of preserving low costs and high profitability. The realisation of this project will reduce considerably the Company’s operational costs.

The current capacity of the ore-treatment mill at Berezniki 1 is 270,000 tonnes of KCl per annum. The Company will close down production at the plant in the first half of 2012. At the same time Uralkali plans to launch the second production line with the capacity of 1.5 million tonnes of KCl per annum at Berezniki 4. The Company has developed a programme incorporating the substitution of the retired capacity whilst preserving its plans to raise the production capacity to 7 million tonnes in Q2 2012, as previously planned, without increasing investment costs. The project includes the optimisation of the production process at Berezniki 2, Berezniki 3 and Berezniki 4.

The Board of Directors has also resolved to mothball and later close the carnallite plant - taking into account the lack of resource base caused by the flooding of the mine at Berezniki 1. Before 2011 the carnallite plant treated the carnallite ore extracted by Silvinit. However, following the reconstruction of its carnallite plant Silvinit plans to process the whole amount of ore at its own facility.

According to a preliminary estimate, Uralkali’s expenses for the liquidation of the ore-treatment mill and the carnallite plant at Berezniki 1 will amount to RUR 1.7 billion. The final estimate of the costs and timeframe of the project will be announced after completion of the project documentation expected before the end of 2011.

New Regulations for the Appointments and Remuneration Committee

The Board of Directors has also approved the new edition of the Regulations for the Appointments and Remuneration Committee of the Board of Directors. These aim to improve the corporate governance of the Company and comply with best international standards. The key change in the Regulations is the adjustment of powers of the Committee and the criteria for the selection of its members, in line with the requirements of the Russian stock exchanges for the issuers of the securities included on Quotation List A. In accordance with the new Regulations, the Board of Directors has resolved to terminate Pavel Grachev’s position as a member of the Appointments and Remuneration Committee.

Incentivisation of top management

The Board of Directors has approved the main principles of the long-term incentive strategy of Uralkali’s top management. These principles are intended to enhance the motivation of the Company’s top-level managers to increase the market capitalisation of the Company in the interests of both shareholders and investors. The principles will last for three calendar years starting from the quarter when the Company completes its combination with Silvinit, which is presumably Q2 2011. The remuneration size will depend on total shareholder return relative to the Company’s peers and will be adjusted to the volatility of the Russian stock market versus the US market. The absolute risk adjusted stock performance will also influence the remuneration size.

Annual Report approval

In addition, the Uralkali Board of Directors has approved the Company’s English 2010 Annual Report and has preliminarily approved the 2010 Annual Report in Russian, subject to approval by the Annual General Shareholders Meeting which will be held not later than June 30, 2011. The Report will be available on the corporate website www.uralkali.com on April 27, 2011.

For investor inquiries
Anna Batarina, CFA
Director for Investor Relations
Tel.: +7 (495) 730 2371

For media inquiries
Alexey Sotskov
Director for Media Relations
Tel.: +7 (495) 730 2371

Brian Cattell/ James Devas
Maitland Communications
Tel.: +44 (20) 7379 5151

This announcement is not intended to, and does not constitute, or form part of, an offer to sell or an invitation to purchase, exchange or subscribe for any securities or a solicitation of any vote or approval in any jurisdiction. This announcement does not constitute a prospectus or a prospectus equivalent document.

Notice to U.S. investors

The proposed business combination involves securities of a non-US company. It is important for U.S. securities holders to be aware that this announcement is subject to disclosure and regulations in England that are different from those in the United States. In addition, U.S. securities holders should be aware that this announcement has been prepared in accordance with English format and style, which differs from the U.S. format and style. In particular the financial information of Uralkali and Silvinit included herein has been prepared in accordance with International Financial Reporting Standards, and thus may not be comparable to financial information of U.S. companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.

It may be difficult for U.S. securities holders to enforce their rights and any claim they may have arising under the U.S. federal securities laws, since Uralkali is located in the Russian Federation, and some or all of its officers and directors may be residents of countries other than the United States. U.S. securities holders may not be able to sue a non-U.S. company or its officers or directors in a non-U.S. court for violations of the U.S. securities laws. It may be difficult to compel a non-U.S. company and its affiliates to subject themselves to a U.S. court’s judgment.

Securities may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended (the "Securities Act"), or pursuant to an exemption from such registration. The Uralkali Shares to be issued in connection with the Proposed Combination are not, and will not be, registered under the Securities Act or under the securities laws of any jurisdiction of the United States and will be issued to Silvinit Shareholders in the United States in reliance on the exemption from registration provided by Rule 802 under the Securities Act and in reliance on available exemptions from any state law registration requirements. The securities of Uralkali and Silvinit have not been, and will not be, registered under the Securities Act or under the securities laws of any jurisdiction of the United States.

No profit forecast

Nothing in this announcement is intended to be, or is to be construed as, a profit forecast or to be interpreted to mean that earnings per Uralkali Share, Uralkali GDR, or Silvinit Share for the current or future financial years, or those of either Uralkali or Silvinit, will necessarily match or exceed the historically published earnings per Uralkali Share, Uralkali GDR or Silvinit Share.

Forward looking statements

This announcement, including any information included or incorporated by reference, may contain “forward-looking statements” concerning Uralkali and Silvinit. Generally, the words “will”, “may”, “should”, “could”, “would”, “can”, “continue”, “opportunity”, “believes”, “expects”, “intends”, “anticipates”, “estimates” or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Uralkali and Silvinit operations and potential synergies resulting from the Proposed Combination; and (iii) the effects of government regulation on the businesses of Uralkali and Silvinit. Many of these risks and uncertainties relate to factors that are beyond the companies’ abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement. Each of Uralkali and Silvinit assumes no obligation in respect of, and does not intend to update, these forward-looking statements.

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