Uralkali Accelerates Investment Programme as Annual Capex Tops $550 Million on New Perm Krai Mines

MOSCOW, May 23, 2024 — Potash producer Uralkali (ПАО «Уралкалий») has markedly accelerated its investment programme since 2022, lifting annual capital expenditure above $550 million, according to the company's annual report, as reported by Interfax. Capex reached $563 million in 2023 and $568 million in 2022 — a historical maximum for the company, whose annual investment never exceeded $380 million in 2014–2020. The bulk of the spending goes into mining projects in Perm Krai in the Urals, tying the programme directly to the regional economy.

A record investment cycle

The current investment level is unprecedented for the company. Between 2014 and 2020, Uralkali's annual capex stayed below $380 million; in 2022–2023 it held above $550 million a year. In 2023, investment in capacity expansion accounted for 53% of total capex — roughly $300 million — with the remainder directed at sustaining existing operations.

Where the money went in 2023

Expansion spending was concentrated in four programmes, all linked to the company's Perm Krai mining complex:

• Ust-Yaiva project — $89 million: the main surface-complex facilities and the first stage of the underground complex were commissioned, and the first tonnes of finished product were obtained;
• Construction of the new Solikamsk-2 mine — $59 million: two mine shafts were brought into service in 2023, and construction of the surface complex continued;
• Expansion of granulation capacity — $45 million;
• Expansion of the Solikamsk-3 mine — $12 million: the mine's capacity grew by 0.3 million tonnes in 2023.

Investment against a high debt load

Uralkali increased capex while carrying a substantial debt burden. Net debt at the end of 2023 stood at $6 billion, and the net debt to EBITDA ratio was 3.51x. Even so, in 2023 the company paid dividends on preferred shares totalling 105 billion rubles, funded from retained earnings of previous years.

Key figures of the announcement

1. Capex 2023: $563 million; capex 2022: $568 million.
2. Historical benchmark: no more than $380 million a year in 2014–2020.
3. Expansion share of 2023 capex: 53%, or about $300 million.
4. Ust-Yaiva: $89 million; Solikamsk-2: $59 million; granulation: $45 million; Solikamsk-3: $12 million.
5. Solikamsk-3 capacity growth in 2023: 0.3 million tonnes.
6. Net debt at end-2023: $6 billion; net debt/EBITDA: 3.51x.
7. Preferred-share dividends paid in 2023: 105 billion rubles.

Company and contacts

Uralkali (ПАО «Уралкалий») is one of the world's leading producers of potash fertilisers (potassium chloride); its mining and processing complex is located in Perm Krai in the Urals.

Contacts: the figures and project milestones in this release are taken from the company's 2023 annual report as reported by Interfax on May 23, 2024; the source provides no further contact details.

Website: https://www.uralkali.com/