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, which is equivalent to approximately 10% of current global supply. 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 (June 2016)
With over 4,000 people working on site, the Usolskiy project continued to progress at a fast pace and remains on track for a late 2017 commissioning of the first floatation trains.
Construction is ongoing on several buildings and facilities, including, among many, the main administration building, the mine administration building, boiler house, canteen, compressor station, reagents building, rail station and loadout, main electrical sub-station, water treatment facilities, the final product and raw ore storage buildings and the main beneficiation mill, where process equipment for the grinding and flotation departments is being installed. The rail spur connecting the site and the Russian Railways network was completed and Usolskiy welcomed its first train and locomotive (diesel-powered) in June. Tie-in to the main gas pipeline with Gazprom is on schedule and expected for mid-August, while the main 220 kV power line is scheduled to be hooked-up in September.
Product storage buildings #1 and #2, each with 135,000 tonnes in capacity, will be completed next quarter. The site’s main substation (220 kV) is also expected to undergo commissioning and certification before year end.
Preparations were made for the development of the freeze wall for the site’s second skip shaft (shaft #3). With all 45 freeze and temperature monitoring holes drilled and cased, freezing operations should begin this autumn in accordance with the project’s development plan.
With the headframe near completion, hoists mounted and cages being installed, the site will begin lowering mining equipment via the cage shaft in the fourth quarter to start the development of the mine this year, as planned.
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.