Russia's Perm region aims to sustain potash supply

29 October 2007 17:50  [Source: ICIS news]

MOSCOW (ICIS news)--The authorities of Russia's Perm region in the Urals suggested on Monday speeding up construction of a new rail line, designed to bypass the area affected by an industrial accident, in order to sustain potash shipments.

The new rail link should be completed by the end of this year, Nikolai Bukhvalov, head of the regional government, was quoted as saying in a statement of the Perm regional authorities Monday.

The state-run Russian Railways earlier pledged to build the new four-mile rail line by February 2008 at an estimated cost of roubles (Rb) 450m ($18m).

After one of the Uralkali's four mines was flooded by underground waters in October 2006, a sinkhole has been threatening the rail line and adjacent living areas.

Earlier this year, the Russian government announced that some 2,000 Berezniki residents should be resettled by 1 December 2007.

Perm region-based Silvinit said that it could halt its potash shipments in the second half of November due to a possible shutdown of the railway. It controls 40% of the Russian potash market and exports roughly 80% of its output.

Russia's top potash producer Uralkali, also based in the Perm region, has not indicated plans to suspend its potash supplies. However, the Belarus Kalium Company (BKC) said that it could halt negotiations on new potash supply contracts.

BKC was set up in August 2005 as a joint venture of Belaruskaliy and Russia's main potash producers to co-ordinate potash exports. although Silvinit has refrained from joining the BKC.

($1 = Rb24.73)

By: Sergei Blagov
+44 20 8652 3214

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