Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr
Issue link: https://emj.epubxp.com/i/613149
Mining at Solikamsk No. 2 was sus- pended and the incident reduced the company's production capacity by 18%. By the end of 2014, the compa- ny had incurred a huge loss, which erased any hopes for a profit. In 2013, the company posted a profit of nearly $670 million. While the fallout from the Solikamsk No. 2 incident was bad, Uralkali has other problems. Russian natural re- source companies have suffered as the ruble lost value against the U.S. dollar. And, a trade conflict with the Belarusian Potash Co. (BKK), which created a firestorm for the potash market, has forced the company to find a new strat- egy for international marketing. "During the first half of 2015, the potash market faced the twin chal- lenges of a tough agricultural environ- ment and inventory drawdown after a solid buildup last year," said Dmitry Osipov, CEO, Uralkali. "Modest demand and strong competition among suppli- ers put pressure on the prices in the spot markets. A challenging market together with Uralkali's decreased capacity resulted in lower sales and rev- enue volumes for Uralkali." Trying to move on from the Solikamsk No. 2 incident, the company is now focused on its 300 billion ruble ($5.8 billion) capacity development program. Solikamsk No. 2 Flooding By mid-December 2014, the size of the sinkhole, which appeared to the east of the Solikamsk No. 2 mine, had nearly doubled. In less than one month, it had increased to 50 x 80 m from 30 x 40 m. During the same time peri- od, the brine inflow into the Solikamsk No. 2 mine had increased to more than 700 m 3 /hr. Uralkali had an accidental liquida- tion plan and initiated comprehensive monitoring of the situation: water inflows were monitored through brine levels checks; additional water monitor- ing wells were drilled; gas levels were monitored around the sinkhole using drones and in the mine; and seismolog- ic stations were established around the sinkhole area. Underground miners were pumping brine from the inflow area in the east- ern part of the minefield to the western part of the minefield to prevent flooding in the area adjacent to the shaft. A brine diversion channel was built for the same purpose. The company also initiated work to strengthen the hy- dro-isolation of the seals between Solikamsk Nos. 1 and 2 minefields. The company began backfilling the worked-out areas of the mine to re- duce rock mass deformation. Uralkali tamped channels to slow the brine inflow into the mine. At the time, Yevgeny Kotlyar, Uralkali's chief engineer, said they were taking all necessary measures to save the Solikamsk No. 2 mine and mini- mize the consequences. Resetting Production Capacity The biggest issue for this year is how the Solikamsk No. 2 flooding will affect Uralkali's operational results, and if the company would be able to get this mine back into production. So far, it seems that Uralkali has succeeded in main- taining production from the Perm region. According to the company's pro- duction figures for the first nine month of 2015, it reduced the production of KCl only by 5.4% compared to the same period last year. During this peri- od, the company produced 8.7 million mt of KCl against 9.2 million mt in the same period of 2014. In the third quar- ter, the company produced 3 million mt of KCl compared to 3.2 million mt in the third quarter of 2014. Management has reconsidered its tar- get production for 2015. Initially, Uralkali planned to produce only 10.2 million mt of KCl against 12.1 million mt in 2014, but after six months, the out- look was raised to 10.4-10.8 million mt. In August, Uralkali revised the produc- tion forecast upward once again, as man- agement announced that the company DECEMBER 2015 • E&MJ; 39 www.e-mj.com U R A L K A L I Dmitry Osipov, CEO, Uralkali. A sinkhole at Solikamsk No. 2 swallows summer cottages.