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December 18, 2003

Uralkali received a long-term loan of 75 million dollars from the European Bank for Reconstruction and Development

The European Bank for Reconstruction and Development has granted Uralkali, the largest Russian potassium producer, a loan in the amount of 75 million dollars for seven years. This is the largest loan ever granted by the Bank in the field of enhancement of effective utilization of energy resources. One half of this sum will be provided by the Bank out of its own funds while the underwriter of the second half of the loan is ABN-AMRO Bank. For Uralkali this is the first long-term loan received on the financial markets. The recoupment period of the project is from four to five years.

The main part of the loan - 55 million dollars will be used by Uralkali for implementation of its power generation program, which will enable the enterprise to supply almost 90% of its power and heat requirements from its own sources and substantially to cut down production costs. The construction of Uralkali's own power generating capacities will also contribute to the improvement of the environment. The gas-driven installations using natural gas will make it possible to reduce harmful discharges into the atmosphere by more than 35 percent. Uralkali is one of the first Russian companies to make investments in the creation of its own power-generating capacities. Apart from this, the loan will be used for upgrading the production and renovating the rolling stock of the enterprise.

Noreen Doyle, First Vice-President of the EBRD said: "We wish to work with companies ... that are important to the Russian Federation .... We need to work with companies that have good financial position and that have transparent ownership and transparent financial statements. So Uralkali meets all of those criteria...And we think that this business is important for Russia and should be supported."

For the EBRD an important condition is that the borrower company has an ecological certificate. At present, the enterprise also has an ISO 14001 international environmental management system certificate, issued by SGS, the world's largest auditing company.

Having become one of the first Russian companies which invest funds in the creation of their own power-generating capacities Uralkali expressed its intention to carry out a Plan of Environmental Protection Measures which has been agreed with the Bank and conforms to the Bank's position with regard to environmental protection.

"The EBRD has two advantages," said Maxim Shirokov, General Director of Uralkali. "The first is that it grants low-interest loans for long periods, which are now unavailable in Russia. Neither are western banks ready to credit long-term infrastructural projects. The second is a very serious credit history. It opens up the possibilities for the enterprise to borrow funds later on for implementation of other investment projects."

An inspection ordered by the EBRD to check the ecological effectiveness of the enterprise was financed by the government of the Netherlands. The inspection has revealed problem areas which were included in the Plan of Environmental Protection Measures adopted for implementation by Uralkali.




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