* Govt has incurred 3.1 bln rbls in expenses from flood
* Future expenses could include mineral resource losses
* No judicial decision to date
* Uralkali says ready to voluntarily pay 3 bln rbls
(Adds details, analyst comment, share price)
By Robin Paxton
MOSCOW, Feb 4 Potash miner Uralkali (URKA.MM)
could face an expense bill in excess of $86 million after the
Russian government ruled it could have done more to prevent a
mine flood in 2006, the company said on Wednesday.
The final amount, say analysts, could be higher as the
government has not yet made public future losses it expects to
incur as a result of the accident. The renewal of the probe has
stoked investor fears of a possible asset grab by the state.
"The Russian government might use Uralkali as a cash cow for
future remedial expenses, which should continue to put pressure
on the stock," UniCredit Aton equity analyst Anna Kochkina said
in a note.
A Russian government commission, at the behest of Deputy
Prime Minister Igor Sechin, has conducted a fresh investigation
into the 2006 flood at Uralkali's Mine 1 in the Ural mountains.
The company was absolved of blame in the original probe in 2006.
Uralkali, citing the commission's report, said on Wednesday
the government had incurred expenses of 3.1 billion roubles
($85.8 million) resettling local residents and building a 6-km
rail link around a sinkhole caused by the flood.
The government report said Uralkali would be liable for
these damages, plus possible future costs including mineral
resource losses, expenses incurred relocating power utilities
and by state railway monopoly Russian Railways, Uralkali said.
"There has to date been no judicial decision requiring
Uralkali to reimburse the expenses listed in the report," the
"However, the company cannot give any assurances that claims
will not arise for such reimbursements, which could exceed 3.1
Uralkali repeated its earlier proposal to voluntarily
compensate expenses incurred by the government in managing the
consequences of the accident. Uralkali estimates these costs at
around 3 billion roubles.
The new probe concluded a combination of geological and
technological factors were responsible and that systematic
geological surveys would have detected the problem earlier. A
protective pillar should also have been placed under the
Uralkali, whose London-traded stock URKAq.L has lost over
90 percent of its value since June, said it could not comment
further until it had received and considered 57 appendices to
the government document.
The company, controlled by billionaire Dmitry Rybolovlev,
said in November its future could be in doubt if the government
forces it to pay excessive damages. [ID:nLA727764]
Uralkali, through its Belarus-based export agent, accounts
for a third of global exports of potash, a soil nutrient used in
First-half profits soared last year on record potash prices,
but the company has been hit hard by the collapse in Russian
stocks and commodity prices.
Uralkali's London-traded stock edged up 1.5 percent to $4.75
by 1515 GMT. Its Moscow-traded shares were down 0.3 percent.
(Editing by Jon Loades-Carter)