OAO Uralkali jumped the most more than five years in Moscow as the largest potash company raised its output goal even after one mine was halted by flooding and it delayed a share deal that would have left it less room to pay dividends.
“With increased capacity utilization at other mines, we intend to produce 12 million tons of potash this year to meet strong demand from our customers,” Chief Executive Officer Dmitry Osipov said in a statement. In August, Uralkali estimated annual output of the fertilizer of 11.5 million metric tons.
The potash producer advanced 14 percent, the biggest gain since May 2009, to 141.50 rubles by the close in Moscow trading, paring its loss for the year to 18 percent.
Uralkali is monitoring the Solikamsk-2 mine in Russia’s Perm region after water poured into the site last month. A sinkhole that has widened to 54 meters (177 feet) by 83 meters opened near the mine, swallowing up summer homes. Uralkali sees a high risk the mine will be completely flooded, forcing it to abandon a site contributing almost 18 percent of its capacity.
“We expect the accident to have an insignificant impact on our 2014 full-year output target,” Osipov said today.
Next year may be different. If the mine is lost, output will be 10 million tons, he told a conference call. Uralkali may also need to write down as much as $1 billion, mostly on lost reserves, Chief Financial Officer Anton Vishanenko said.
Delay Cancellation
Uralkali may respond to such a loss by accelerating startups of new mines and shipping some ore from its Solikamsk-3 site to be processed at the plant servicing the flooded mine, according to a company presentation.
For the rest of this article, click here: http://www.businessweek.com/news/2014-12-18/uralkali-boosts-2014-output-target-by-4-percent-even-as-mine-sinks