Production in 2013

As a result of the increase in capacity of the Berezniki-4 mine and processing plant, the Company’s overall potash production capacity reached 13 million tonnes at the beginning of 2013. Total production in 2013 amounted to 10 million tonnes, 10% higher than in 2012. Consequently, the Company’s capacity utilisation rate in 2013 was 78%. The implementation of our capacity expansion programme allows us to respond quickly to increasing customer demand. Despite having increased our average output for the year, the Company is operated at a technically comfortable capacity utilisation level of approximately 80%.

Capacity expansion programme

In 2013, the Company continued to implement its programme of
modernisation and capacity expansion, initiated in previous years.

Project name Project capacity
(mln t KCI)
Capex
(mln US$ per tonne)
Commissioning/Full capacity Capacity is given as of the year-end.date
Debottlenecking 1.0 113 2014-2017
Solikamsk-3 (phase 1) 0.4 363 2017
Ust-Yayvinsky field Including 0.5 mln tonnes of additional capacity and 2.3 million tonnes of new capacity that will replace the depleting capacity of Berezniki-2 mine.2.8 541 2020

Ust-Yayva

In 2013, the Company continued to construct shafts as part of the project to develop the Ust-Yayva site. The drilling and casing of freezing holes on both shafts has been completed and priority installations and temporary facilities required for the period of shaft sinking have been constructed. In December 2013, sinking equipment was brought into operation and the sinking of shaft No. 1 began. As of the end of March, the shaft had been sunk to a level of 45m. The designing of the surface complex is in progress. The start of construction of permanent surface facilities is planned for 2015; this will allow the works to be completed by the time that the shafts come into operation.

Production optimisation

In 2013, the Company continued to implement projects to increase output in production sections and for debottlenecking. The projects provide for an increase in the extraction ratio of the commercial substance, potash, from sylvinite ore, as well as a 15-25% increase in output in existing technological sections of plants. The project involves the modernisation of existing equipment, as well as its partial replacement with more technologically advanced options. The project will lead to an increase in the Company’s potash production capacity of 1.0 million tonnes by the end of 2016.

Solikamsk-3, phase 1

The first phase of the Solikamsk-3 expansion project involved the installation of equipment for the inspection and re-entry of shaft No. 4, and the development of design documentation.

Currently under feasibility studies. Decision on the start of construction to be made in 2015Additional expansion projects

Polovodovo

The Company continues to develop design documentation for the development of the Polovodovo site. The drilling of test and shaft wells for the design of mine shafts is currently ongoing. According to the license conditions, the design documentation should be developed and agreed by 2017. A decision on construction will be taken after the documentation has been prepared.

Solikamsk-3, phase 2

The second phase of the project provides for the launch of an additional main ventilation unit to expand the capacity of the mine and increase its enrichment capacities by 1.7 million tonnes per year. The project is now in the design phase; the preliminary design documentation has been developed. A decision on construction will be taken after the project documentation has been prepared.

Other projects

In 2013, the Company continued to reconstruct its carnallite plant. The installation of steam pipe racks, a power grid, a water pipeline and sewerage system is ongoing. The installation of equipment in the adjustable vacuum crystallisation unit is also in progress. All activities are aimed at increasing the capacity of the carnallite plant to 400,000 tonnes per year. The main works should be completed in 2014. Investments in the project in 2013 amounted to approximately US$ 13 million.

As part of work to maintain capacity, a number of activities are taking place: shaft panels are being prepared, mined sites are being prepared for filling, equipment is being replaced and modernised, and industrial safety systems are being adapted to conform to current standards.

The Company is carrying out targeted work to improve mine safety. In 2013, it continued projects to protect waterproof strata and mined objects on the earth’s surface. Work on filling mined areas is also underway.