Uralkali Fights to Avoid State Theft

The last time we blogged about the Russian potash mining company Uralkali, currently under siege from a possible expropriation attempt from the government, it was in the context of the clan wars.  This week more details are becoming apparent after the company’s stock has crashed 30% in value on the London market, following announcements of output cuts and losses of $650 million in profits for the fourth quarter.  The problems for the mining group, which was once considered one of Russia’s most attractive IPOs, are only just getting started as some familiar figures in the Kremlin are taking an unhealthy interest in a reopened safety probe.

The Mining Journalis running a story today about an attempt by Uralkali executives to putan end to the crisis, and a letter sent to the natural resourcesminister including to offer to pay $270 million as a “penalty” to makethe investigation go away.  Even the financial analysts at Unicreditappear to be watching the ups and downs of the state’s reopenedinvestigation into the mine flood accident, remarking that “We welcome Uralkali`s decision, as it indicates the company has changedits stance and is now more willing to co-operate with the government,therefore increasing the chances of a financial solution.“

That makes sense – the same thing worked for Mechel to make their very serious problems disappear (Putin himself famously threatened the company in public, suggesting that he send “a doctor” to clean up the problems).

But the comparisons between Yukos and the current Uralkali drama are more than just conjecture – the very architects who engineered the state’s illegal takeover of Yukos are also pulling the strings behind this attack.  According to reports in Vedomosti, Anton Ustinov is now working in the offices of Igor Sechin, and is leading the “investigation” into Uralkali.