News

January 13, 2009

Potash Sinkhole Or Kremlin Plot? - Uralkali Undermined

By John Helmer in Moscow

The failure of high Russian government officials to decide whether to create a powerful new potash and phosphate mining monopoly continues to delay the release of the results of a commission of inquiry into the collapse of a potash mine in the central Urals region town of Berezniki two years ago. The longer the delay, the firmer potash prices are likely to become in the bellwether Asian markets, and the less likely Uralkali's majority shareholder, Dmitry Rybolovlev, will keep his control.

Mine-1, owned and operated by Uralkali, was forced to halt operations, and was abandoned, after a massive sinkhole opened at the surface in October 2006. Initial government investigations ruled that the loss of the mine and its potash reserves was force majeure. In the geology of potash deposits, such events are not unusual, and have occurred elsewhere in the potash mining world. However, over the past ten weeks, the incident has been exploited by officials in Moscow seeking to engineer a...