As Uralkali has disclosed previously, on October 17, 2006, a sudden, uncontrollable inflow of groundwater was detected in Uralkali's oldest mine, Mine 1. Mine 1 was rendered non-operational and Uralkali's production plans since then have taken this into account. On October 28, 2006 the Commission, created by the Federal Service for Environmental, Technological and Nuclear Supervision (Rostekhnadzor), after having investigated the causes of the flooding, concluded that the main cause of the flooding was a ‘‘previously unknown anomaly of geological structure’’, that mining operations in the affected area were conducted by Uralkali in compliance with the regulations existing at that time, and classified the circumstances preceding the flooding as being ‘‘extraordinary and unavoidable events under prevailing conditions not dependent on the will of the parties involved.’’ The flooding has also been classified by the Federal Chamber of Commerce and Industry as an ‘‘unpredictable force majeure event’’.

On November 6, 2008 Uralkali was officially informed by the Minutes of the meeting held by the Deputy Prime Minister, Mr. Sechin, on October 29, 2008 about the decision to establish a commission to re-investigate the causes of the accident that happened at Uralkali’s Mine-1 in 2006, notwithstanding the findings of the original investigation. Such Minutes, in particular, contain instructions “for Rostekhnadzor in two weeks time to form a commission with participation of representatives of the relevant federal executive authorities, Accounts Chamber of the Russian Federation, independent experts in order to determine causes of the accident at the mine in the city of Berezniki, amount of damages caused to the state and companies (including TGK-9 power generation company and OJSC “RZhD”) as a result of the subsoil user [Uralkali] activities, to conduct legal diligence with justification of the possibility and necessity of the damage recovery from the subsoil user, and also to evaluate costs incurred by the state for the resettlement of citizens of the city of Berezniki, relocation of the railway line, power and heat supply systems, as well as to prepare proposals on companies’ liability. The results of the commission’s work are to be reported to the Government in December of 2008.”

Uralkali is surprised by the decision to re-open the investigation into the causes of the flooding two years after the accident. The company continues to believe that the initial technical investigation was conducted in full compliance with Russian law and that its conclusions correctly reflected the causes of the Mine-1 flooding. Uralkali intends to fully cooperate with the new commission in its new investigation.