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 (December 2016)
With mining equipment at mine development level, the Group’s first Ural-20R mining machine was deployed in the fourth quarter. In December, the connection between the cage and skip shafts was completed. As of early February, over one kilometer of underground development had been completed.
Construction and assembly work continued at the main beneficiation building (Grinding and Flotation Department / Drying and Compaction Department / Thickening Department). The EuroChem Usolskiy team sustained its efforts to maintain our fourth quarter 2017 startup target as well as prepare for both the cold commissioning and a hot testing of the plant. Other portions of the facilities are being completed, which include turnover of the gas pipeline system, water treating system, boiler house, and ventilation equipment. Work has begun on all of the various galleries, loadout, salt dump, tailings management area, crushing, load center, and administration building. The first of several storage buildings are well along and one raw ore building is close to being completely enclosed.
The installation of the freeze gallery and foundations of the headframe for the sinking of the site’s third shaft (combination skip/cage shaft) were completed and the rock freezing program started.
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.