We currently have access to over 10 billion tonnes of potash reserves in two key deposits in Russia and are conducting geological work on other deposits to which we have secured mining rights. Once on stream, our two ongoing potash projects will have over 8.3 MMT KCI (5.0 MMT K2O) of capacity. The development of potash capacity is one of our main strategic priorities. We are constructing mining and processing facilities at two locations in Russia; at the Gremyachinskoe deposit (EuroChem-VolgaKaliy, Volgograd region) and at the Verkhnekamskoe deposit (EuroChem Usolskiy, Perm region).
USOLSKIY POTASH, VERKHNEKAMSKOE DEPOSIT (PERM REGION, RUSSIA)
The cage shaft and skip shaft sinking operations were completed in 2014.
In June 2014, we gained the rights to explore and produce potash from the Belopashinsky plot of the Verkhnekamskoe deposit. The 65km2 licence area is adjacent to the Palashersky plot currently being developed. This brought the total licence area up to 188km2 and total reserves and resources to about 2.3 billion tonnes of ore. This offers a useful mine life of at least 60 years at today’s planned annual production capacity of 3.7 MMT of KCI.
Located in the Perm region near Russia’s traditional potash production sites, the Verkhnekamskoe potash deposit is one of the largest in the world. Within this deposit, Usolskiy Potash has secured rights to over 2.3 billion tonnes of reserves with an average KCI content of 30.8% and an active mine life of 35+ years.
Status (Q2 2017)
Recent developments: EuroChem Usolskiy Potash (Verkhnekamskoe potash deposit, Perm region)
South of Berezniki, EuroChem Usolskiy crews and contractors achieved good progress, with the latter focused on achieving their November target for the handover of the site’s first potash production train and allowing the commissioning process to begin. As part of the beneficiation plant, the first phase of the project entails four production trains to be commissioned sequentially, one at a time, through Q3 2018. These four trains represent a total MOP production capacity of 2.3 MMT per annum once fully ramped-up. The site will produce both standard and granular red product (95.0% KCl). While the start of operations remains conditional to the completion of several items, which could lead to slight schedule revisions, the Group would not expect such changes to impact its combined production objectives for 2017/18.
Construction and assembly work continued across the mill’s three sections, the Grinding and Flotation Department, the Drying and Compaction Department, and the Thickening Department. The site’s first skips were commissioned in early July and have been working under increasing loads and speed. The skips (four in total) are designed to bring up to 30 tonnes of ore each from around -430 meters to the surface, providing approximately 9 million tonnes of raw ore annually. The salt dump, boiler plant, water treatment, and gas system are essentially complete and awaiting certification prior to the start of operations.
Construction progress at the crushing facilities progressed and remains in-line with commissioning plans. While punch list items continue to be addressed, conveyors from the skip shaft to the salt dump area were installed and as of early July, were in initial start-up service to the salt dump.
Usolskiy project finance – a unique project and a testament to our management strength and commitment to social and environmental best practice.
To support the ongoing development of our Usolskiy potash project, in August 2014, we secured a non-recourse US$ 750 million finance facility over eight years with a 3.5-year availability period. It was one of the very few such deals in Russia to successfully close in 2014. As part of the due diligence, the syndicate of lenders, together with their external advisor, assessed the social and environmental risks attached to the project. A key part of this process was a detailed review of how well it complied with local and International Finance Corporation (IFC)/World Bank requirements and those of the Equator Principles (EP), a social and environmental risk management framework for financial institutions. A number of targeted environmental and social studies and audits were undertaken. These also focused on appropriate design criteria to ensure that the project utilizes best international practice and procedures. To aid this process, we prepared an Environmental and Social Impact Assessment (ESIA) and implemented a comprehensive Environmental and Social Action Plan. While these are not requirements under Russian law, all parties agreed that the project should comply with the latest EP standards.
The Usolskiy facility won the 2014 European Mining and Metals Deal of the Year from Infrastructure Journal Global. It is also the first fertilizer project in Russia to comply with the Equator Principles (EP) III standards, and is testament to our management strength and our commitment to social and environmental best practice.