State Probe Threatens Uralkali

Uralkali said its "future existence is in doubt" after the government reopened an investigation into a 2006 mine flood.

Uralkali would suffer "an enormous financial strain if found culpable and made liable to the state and third parties for all damages," the company said Monday.

Deputy Prime Minister Igor Sechin last week asked the Federal Service for Environmental, Technological and Atomic Inspection to reopen its investigation into the cause of the flood and the damage done. Potash prices have risen more than fivefold since the October 2006 flood at Uralkali's Mine 1, leading companies such as state-run arms trader Rosoboronexport to enter the industry.

Uralkali dropped 62 percent to close at $6.50 in London, heading for its biggest decline in a month. Uralkali has lost 82 percent this year.

The 2006 investigation concluded that the flooding was a result of "extraordinary and unavoidable events," Uralkali said Nov. 7.

"We don't see ourselves legally or morally responsible for an accident that can be compared to an earthquake or a hurricane," Uralkali said Monday.

The company's mining license stipulates that Uralkali is "obliged to reimburse the state for damages" to a mineral deposit or forfeit any insurance payments received for such damages, according to a marketing document prepared for Uralkali's London share sale last October.