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21 Jul, 2008 04:28

Eurochem’s move into Potash puts it into the global league

Russia now has its first diversified domestic fertilizer company. Eurochem is starting the construction of its first potash field – aimed at supporting the Russian agriculture sector.

Potash is already a hot sector on the market. Potash prices exceed $1000 per ton and have grown 10 times in the past 4 years. Attracted by the potential, Eurochem has launched the Gremyachinsky project. Eurochem General Director, Dmitry Stregnev, says inflation has driven up the cost of getting the project off the ground.

The project cost estimated over 1 billion dollars 2 years ago, well now it's 2 billion dollars due to inflation on metal and equipment. Thats the final figure.

It's a technically complicated project – so Eurochem has hired the services of two world leaders. Thyssen Schachtbau and Shaft Sinkers bring skills in two areas – freezing and cementing during shaft construction.  A third partner -Canada's Hatch will build the potash plant.  Shaft Sinkers Managing Director, Robert Schroeder says the project will be a challenge.

The challenge will really come for us below 500 meters.  Between 500 metres and approximately 800 metres theres some extremely wide bands of water and water bearing materials.  And that is where we are going to be using our grouting techniques for the first time in Russia, against the traditional fusing technology that’s generally been used here.

New technology will help prevent water getting into the mineral layer that could flood the mine.  Global expertise is essential for Eurochem in their first potash field, and the first greenfield project in Russia since the 1980s.  Marina Alekseenkova, Director at Renaissance Capital says it will change the company and its direction.

Eurochem traditionally produced phosphate fertilizers, and is one of the largest holdings in Russia.  With the potash project Eurochem will become comparable with global companies like Potash Corporation, Mosaic, and Agrium.

It's only competitors are Uralkali and Silvinit. They have 5.4 million tons of capacity with a target of 7 million tons by the end of the decade. Analysts say Eurochem, with it's new project can secure 20% of Russian potash production. The company has begun the hardest part of the job, drilling the shafts to extract the minerals. These will be as deep as eleven hundred meters. Eurochem will reach a capacity of 2.3 mln tons by 2012, becoming an important player on the Russian and global potash markets.