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Uralkali Announcement on Solikamsk-2 mine

Uralkali Announcement on Solikamsk-2 mine

Uralkali (LSE: URKA; the Company) updates on the current situation at Solikamsk-2 mine.

Between 18 November 2014 and 10 December 2014, the sinkhole, which appeared to the east of the Solikamsk-2 production site, increased in size to 50 by 80 meters. As of 18 November 2014, the size of the sinkhole was approximately 30 by 40 meters.

Between 18 November 2014 and 10 December 2014, the brine inflow into Solikamsk-2 mine has varied. The average brine inflow during this period was over 700 cubic meters per hour.

In line with the accident liquidation plan, Uralkali continues ongoing comprehensive monitoring of the situation: water inflows are monitored through brine levels checks; the drilling of additional water monitoring wells is in progress; gas levels are monitored around the sinkhole and in the mine; the sinkhole is monitored from a distance using air drones; and seismologic control of the sinkhole area has been set up.

In coordination with the Federal Service for Ecological, Technological, and Nuclear Inspectorate (Rostechnadzor), Uralkali is implementing a number of measures to minimise consequences of the accident:

  • Uralkali employees with the assistance of mine rescue specialists are pumping brine from the inflow area in the eastern part of the minefield to the western part of the minefield to prevent flooding in the area adjacent to the shaft;
  • For the same purpose the Company is building a brine diversion channel;
  • Uralkali is conducting works to strengthen the hydro-isolation of the cut-off walls between Solikamsk-1 and Solikamsk-2 minefields;
  • The Company is backfilling the worked-out areas of the mine to reduce the rock mass deformation;
  • Uralkali is carrying out preliminary works for tamping channels of brine inflow into the mine.

Following the accident, Solikamsk-2 mine and plant employees (the total headcount is 1,266, including 771 employees of the mine) who are not involved in the accident liquidation are on a leave until 15 January 2015 and are paid 2/3 of their average salary. The Company is seeking to employ them at other Uralkali facilities.

Alexander Baryakh, General Director of the Mining Institute of the Urals Branch of the Russian Academy of Science:

We now understand the factors that caused the accident. Fortunately, there are no risks for the Solikamsk residents. We are employing a wide range of instruments to analyse, forecast and prevent negative consequences. Our analysis of the current situation and the experience of global potash mining industry allow us to conclude that the possibility of the negative scenario — complete mine flooding  remains high. We are prepared for this outcome but doing our best to to minimise associated risks.

Yevgeny Kotlyar, Uralkali Chief Engineer:

We are taking all necessary measures to save Solikamsk-2 mine and minimise the consequences of the accident, fully complying with Rostekhnadzor requirements and recommendations of leading Russian and international specialists. Our team continues to analyse various scenarios and assess our possible future actions. The safety of our employeesand other specialists involved remains our top priority.

Background information

On 18 November 2014, Uralkali detected higher levels of brine inflow and hydrogen sulphide in its Solikamsk-2 mine. To ensure safety, the Company suspended all works in the mine,introduced an emergency plan and evacuated personnel to above ground, during which nobody was injured.

In the evening of 18 November, a sinkhole with a size of 30 by 40 metres was detected to the east of the Solikamsk-2 production site, outside the metropolitan area on the territory of a summer cottage village. Immediately after the accident, the Company introduced a comprehensive monitoring of the situation. Uralkali coordinates its actions with the town administration and takes all necessary measures to minimise the negative impact on the citizens of the town of Solikamsk and Solikamsk area.

The Company has engaged scientific institutes, such as the Mining Institute of the Urals Branch of the Russian Academy of Science, Galurgiya, and All-Russia Scientific Research Institute of Halurgy, to supervise monitoring and analysis of the situation and develop forecasts and recommendations.

Uralkali (www.uralkali.com) is one of the world’s largest potash producers and exporters. The Companys assets consist of 5 mines and 7 ore-treatment mills situated in the towns of Berezniki and Solikamsk (Perm Region, Russia). Uralkali employs ca.11,300 people (in the main production unit). Uralkalis shares and GDRs are traded on the Moscow Exchange and London Stock Exchange, respectively.

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