Uralkali Approaches State With Resolution

Potash miner Uralkali, whose investors fear that it faces a state asset grab in a probe of a mine accident, has approached the government to discuss a resolution, putting the ball in the state's court.

Uralkali said in e-mailed comments that it had written to Natural Resources and Environment Minister Yury Trutnev about "managing the consequences of the accident." It did not disclose the letter's contents.

Russian newspapers said Uralkali made a pre-emptive offer to pay the government $270 million in compensation for a rail bypass built around the sinkhole that opened up when Uralkali's Mine-1 flooded in 2006.

Uralkali shares, which lost two-thirds of their value in the two weeks since Deputy Prime Minister Igor Sechin ordered a reopening of the investigation into the flood, rose 22 percent in London. The shares are still down 92 percent from their June peak.

"We welcome Uralkali's decision, as it indicates the company has changed its stance and is now more willing to cooperate with the government, therefore increasing the chances of a financial solution," UniCredit analysts wrote in a note.

The commission will evaluate costs incurred by the state to resettle citizens of Berezniki away from the sinkhole and relocate the railway line, power and heat supply systems.

Uralkali has said its future would be in doubt if the government decided to impose the maximum punishment for the mine accident. Analysts have said the damages could be devastating if Uralkali is fined for lost potash ore.

"Despite attractive valuation, we view risk of an excessive fine as high," Citibank said in a comment.