Inquiry Into Uralkali Reopened

Potash miner Uralkali faces possible damage claims from the government after Deputy Prime Minister Igor Sechin ordered a commission to reopen an investigation into a 2006 flood.

Uralkali's shares plunged more than 15 percent after it issued a statement Friday saying the country's industrial safety watchdog had been instructed to form a commission to determine the cause of the accident and possible damages.

The commission has been tasked with conducting legal diligence to determine "the possibility and necessity" of recovering damages, Uralkali said in the statement.

Uralkali halted operations at the mine following the flood two years ago, but the sinkhole it created continued to expand, threatening a nearby rail line and housing as well as potash supplies from rival miner Silvinit, which uses the rail link to ship its products.

Russian Railways has since built a bypass to circumvent the affected section.

The Federal Service for Environmental, Technological and Atomic Inspection's commission will "evaluate costs incurred by the state for the resettlement of citizens of the city of Berezniki, relocation of the railway line, power and heat supply systems," the statement said.

The commission has also been asked to determine the amount of damages incurred specifically by Russian Railways and the TGK-9 power utility. It will report the results of its investigation to the government next month.

If the company is found liable, total claims could amount to "at least 16.7 billion rubles" ($619 million), a source familiar with the situation said, Interfax reported Friday.

Uralkali expressed surprise at the decision, noting that a 2006 investigation found that the flooding was caused by "extraordinary and unavoidable events under prevailing conditions not dependent on the will of the parties involved."

The company said it would cooperate fully with the new investigation.

Uralkali's stock fell 18 percent on the MICEX before closing the day down 10.4 percent. Its London-traded stock shed 13 percent.

Reuters, MT