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. Last Updated: 07/27/2016

Morgan, Goldman Advising Uralkaly

Uralkaly, the world's fourth-largest producer of potassium fertilizers, met with bankers from Goldman Sachs and J.P. Morgan Chase on Tuesday as the company seeks a partner to help it expand abroad. The company's shares rose.

"We are talking with Goldman Sachs and J.P. Morgan about finding a strategic partner -- someone that has experience in the area of minerals on an international scale," Uralkaly president Maxim Shirokov said in an interview in London.

He declined to name potential partners.

Berezniki-based Uralkaly, the third-best performing stock on the Russian Trading System Index during the past 12 months, seeks to boost production of granulated fertilizers to increase its market share in Asia and South America, Shirokov said. Granulated fertilizers generate higher returns, are easier to ship and mix better with other mineral fertilizers.

Demand for potassium fertilizers is growing at the fastest pace in 20 years as Asia boosts imports and warehouse stockpiles decline, Shirokov said. Potassium fertilizer demand may rise as much as 10 percent this year. Uralkaly exports 85 percent of its output, with two-thirds of those shipments bound for Asia.

Uralkaly, which says its potassium reserves are sufficient to last more than 300 years, expects to boost production by 7 percent this year to 4.7 million tons. The company operates three mines and four enrichment facilities.

The shares, which trade infrequently and mainly over the counter, rose 14 percent to 25 cents in Moscow, the highest since at least 1999, valuing the company at $531 million. More than 360,000 shares changed hands, about five times the daily average.

Representatives of ZEN-NOH, a federation of agricultural cooperatives in Japan consisting of 4.7 million households, met with Uralkaly managers at the company's Berezniki plant last month. ZEN-NOH purchases and supplies materials for its members. Uralkaly is aiming to supply Japan with fertilizer, the company said in a statement.

North and South America are Uralkaly's second-biggest market, taking 22 percent of the Russian company's exports.

Uralkaly may seek to sell more shares to the public in the next few years, once it completes plans to create a trading unit and establish an international brand, increasing the company's share price, Shirokov said. The fertilizer maker currently sells its products in bulk to companies that market the chemicals under their own brands.

Uralkaly also plans to issue quarterly results to international accounting standards starting in 2005, he said.

"The board of directors adopted a new strategy to tap capital markets in two to three years through a bond or share sale, but it's too premature to say what we will choose," he said. Publishing international standard results would "help us to secure loans or sell shares."

Uralkaly will double investments this year to about 2 billion rubles ($70 million) to finance construction of power generators, buy rail cars and acquire mining machinery. The company borrowed $75 million from the European Bank for Reconstruction and Development this year.

About 80 percent of the company is controlled by a group of individuals that includes Dmitry Rybolovlev, Uralkaly's board chairman.