Uralkali's Shares Soar After Trutnev Speaks in Its Favor

Shares of Uralkali soared on Thursday after a minister said it should not be blamed for a mining accident, easing investors' fears that a new probe would lead to a state asset grab.

"I think the investigation into Uralkali's fault is inappropriate," Resources Minister Yury Trutnev said.

Uralkali's shares rose following the comment to close up by 12 percent on the MICEX and 22 percent in London.

The shares suffered badly last month after Deputy Prime Minister Igor Sechin, who oversees the natural resources sector and is a close ally of Prime Minister Vladimir Putin, ordered a new probe into a 2006 mine flood.

Uralkali has said an original investigation in 2006 found that the mine flooding was caused by "extraordinary and unavoidable events" and warned that its future would be in doubt if the state decided to impose the maximum punishment for the accident.

Analysts have said the damages could be devastating if Uralkali is fined for lost potash ore.

Uralkali has approached the government to discuss a resolution, and newspapers reported that it 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.

A government commission is evaluating costs incurred by the state to resettle citizens of the Urals city of Berezniki away from the sinkhole and relocate the railway line, power and heat supply systems.

"It is definitely not a mistake of today's system of management. If we talk about the main mistake, it took place even earlier. Unfortunately, potash mines are often flooded around the world," said Trutnev.

"In this particular case, the main mistake was made in 1935-1937, when some 'smart' people decided to build a city on top of it [the mine]. Usually, there are no such mistakes [around the world]," he added.