1. W
ith a steadily increasing world
population, decreasing available arable
land for cultivation, and developing
countries moving towards a protein rich diet, the
growing demand for mineral-based fertilisers
based on potassium, nitrogen and phosphate
seems a sure bet for the foreseeable future.
Russia accounts for some 35% of the world’s
supply of potash, with the region surrounding
the city of Berezniki in particular having played a
vital role in potash development for many years.
In 1932, Berezniki was granted city status as the
industry developed as part of the one of the
early Soviet five-year plans. The vast potash
reserves were central to this and the first mining
on the VPD deposit commenced in 1933.
Intensive mining continued during the 1980s, by
which time six mines of the two potash
companies (JSC “Silvinit” and JSC “Urakali”)
were extracting potash from the central and
southern parts of the deposit.
The Usolskiy project is one of the first new
greenfield potash projects in Russia and Europe
to be developed in the last 30 years and sits in a
region with a rich potash reserves and a local
population with a strong history and knowledge
of salt and potash mining. The project is
currently in the development stage, and is
expected to commence production in late 2017.
Project background
EuroChem purchased the Palashersky licence
area situated in the Verkhnekamskoe deposit in
the Perm region of Russia in 2008. The deposit
contains potassium and magnesium salts
covering an area with a length of 136 km and a
width of 40 km, which is roughly twice the size of
Greater London. The deposit has 52,000 Mt of
potash reserves, and 73,000 Mt of magnesium
salts with a 4 m productive potash layer lying at
a depth of approximately 500 m. The nutrient
content here is 30.8 KCL and in June 2014,
EuroChem further strengthened its potash
resource base by winning the rights to explore
and produce potash from the Belopashinsky
potash licence area which covers an additional
65 km2, bringing the total license area to 188
km2.
Clark Bailey, Mining Director at EuroChem
coments: “We are delighted to win the licence
for another potash deposit. Its close proximity to
our EuroChem-Usolskiy potash development will
allow us to significantly expand our high quality
resource base. The construction of our two
potash projects and the development of this
deposit fall within the company’s plans to create
our potash business, a key part of EuroChem’s
growth strategy to become one of the world’s
top-five fertiliser companies.”
The two licence areas are estimated to have
proven and probable reserves of around 2,500
Mt of ore, allowing for a mine life of as much as
60 years at a 15 Mt/y production rate (3.7 Mt/y
KCl).
Potash projects like EuroChem’s Usolskiy are
of course very capital intensive, and take long
periods of time to commence production, but
with the ongoing high demand for potash,
EuroChem has confidence in the success of the
venture. In addition, the position and the
logistics of the projects that are coming in to
development in 2017 will allow EuroChem to
have cost-completive reserves.
In September this year EuroChem signed a
loan facility with a syndicate of banks for the
project financing of Usolskiy. The finance is
structured as a non-recourse $750 million
project facility. Andrey Ilyin, EuroChem Finance
Director commented, “This facility is a landmark
for EuroChem, as it secures funding for one of
our strategic projects and - due to its non-
recourse nature - releases operating cash flows
for other strategic investments” “ EuroChem
Deputy Finance Director Alexander Gavrilov
added: “One of a handful of project finance
exercises in Russia, this milestone facility
provides our potash project with long-term
funding, while keeping EuroChem’s overall
borrowing capacity and credit profile intact.”
Mine development progress
At the time of the visit, EuroChem was
developing Phase 1 of its Usolskiy potash
project, to a planned annual capacity of 2.3 Mt
KCL. This stage of development involves the
construction of the social infrastructure, the
development of the cage shaft, the double-skip
shaft #1, and the processing facilities.
The shafts for the potash project were
constructed by the Russian contractor US-30.
The sinking of the cage shaft was completed in
October 2013 to 473 m and skip shaft #1 was
completed by early September 2014, reaching a
depth of 547 m. Skip shaft #2 is aiming for
construction between 2016-2018, depending on
how the project develops.
The first shaft completed at Usolskiy was the
cage shaft, and sinking commenced in 2012
following the successful freezing of the ground.
The sinking operations progressed to the shaft’s
target depth of 473 m at an average rate of 42
m/mth. The freeze holes for number 1 shaft
followed a circle diameter of 17 m and were to be
drilled and cased to a depth of 270.6 m. This
involved drilling a total of 44 freeze holes and
four thermal boreholes. In 2013, the cage shaft
reached a level in the halite for cross over to the
skip shaft and waterproofing was completed.
00 International Mining | NOVEMBER 2014
Perm’s potash revival
The Usolskiy potash project, located in the Perm
territory of Russia has been considered one of the most
technologically advanced in the industry, Robert Pell
visited EuroChems’s mine-in-development to see how
things are progressing.
OPERATION FOCUS

2. Work on the second shaft began immediately
after the first project had been completed. The
second shaft was to have 44 freeze holes and
four temperature measurement holes drilled to a
cased depth of 273.6 m and arranged in an 18 m
diameter freeze ring. As shaft number 2 was 4 m
higher than shaft number 1 the interconnecting
pipe at this point was installed and cemented in
place to a depth of 125 m. The potash level was
reached in 2013, and ventilation equipment was
purchased as well as the completion of
waterproofing. During 2014 excavation was
carried out for underground bins at loading
pockets.
The freeze wall was designed and operated by
Thyssen Schachtbau GmbH, the German shaft
sinking specialist involved in the freezing of
shafts at both of the company’s potash sites,
Usolskiy Potash and VolgaKaliy.
In the mine, the assembly of the continuous
mining combines is expected to be completed in
the Q2 of 2015 and the ventilation systems are
predicted to be completed in Q3 of 2016.
The second phase of the project currently
involves the construction of an additional skip
shaft, which will add an additional capacity of 1.4
Mt/y of KCL and will bring the site’s total annual
capacity to 3.7 Mt. The position of this shaft is
currently under consideration following the
winning of the rights to the Belopashinsky
potash license area to the west of the project.
Phase 2 also involves further development on
the processing facility. The total estimated
investment in Phase 2 is $400 million, bringing
the total investment up to $2,800 million.
Sinking operations are now focussed on the
development of the haulage section and the
loading stations, and contractor Thyssen
Schachtbau is scheduled to abandon the freeze
holes at both shafts in the coming months. The
back grouting is due to be finished around March
2015.
On the surface, work has been completed on
the workers facilities, in addition to the freeze
plants and temporary roads that have been
00 International Mining | NOVEMBER 2014
OPERATION FOCUS
Package name Procurement phase Supplier/Contractor Country of Origin
(Bidding/Contracting/
Order Placed/Delivered)
Major equipment
Thickeners Order Placed Andritz Separation GmbH Germany
Hydrocyclones Contracting AKW Apparate+Verfahren GmbH Germany
Shaft hoists for both cage and skip shafts Order Placed INCO Engineering sro Czech Republic
Mine ventilation equipment. Delivered TLT Turbo GmbH Germany
Compaction equipment Order Placed Maschinenfabrik Koeppern GmbH Germany
Dryers and coolers Order Placed Binder+Co AG Austria
Flotation equipment Order Placed MBE Coal & Minerals Technology GmbH Germany
Screens Order Placed RHEWUM GmbH Germany
Reclaimers Order Placed Magdeburger Förderanlagen und Baumaschinen GmbH (FAM) Germany
Other package (crushing, filtration, Order Placed Various various
sound-suppressing etc.)
Active contracts
Shaft hoist buildings Order Placed Open joint-stock company production unit Montazhnik Russia
Ventilation ducts (surface & underground) Order Placed Ural-Remstroyservice LLC Russia
Piling contractor Order Placed Revvork LLC, USR Nulevik CJCC, Ural Construction Company LLC Russia
Excavation contractor for beneficiation building Order Placed Energokom LLC Russia
Canteen building Order Placed Ural-Remstroyservice LLC Russia
Mine administration building Order Placed Delgra Construction LLC Russia
Equipment storage building Order Placed Ural-Remstroyservice LLC Russia
Water pipeline Order Placed Vertikal LLC Russia
Natural gas pipeline Order Placed Zapolyarpromgrazhdanstroy LLC Russia
Railroad (dirt work for levelling and rails Order Placed Bamstroymehanizaciy LLC, Permdorstroy LLC Russia
including sidings and switches)
Contracts at bidding stage
Main electrical substation Bidding
Heating plant/building Bidding
Permanent headframes Bidding
Raw ore storage buildings Bidding
Product storage buildings Bidding
General contractor for the main beneficiation Bidding
building
Completed and discharged from site
Freeze plant system for shafts Delivered State organisation US-30 Russia
Freeze hole abandonment system for both shafts. Delivered Thyssen Schachtbau GmbH Germany
Pond to retain rainfall and snow melt Delivered Uralstroyservice LLC Russia
Shaft sinking for both shafts (although Delivered State organisation US-30 Russia
contractor has been awarded other u/g work)
Main equipment orders for EuroChem-Usolskiy project (as of mid-September 2014)

3. created. The headframes of the shafts are also
temporary and are to be replaced later this year
with permanent ones. The shaft-sinking
equipment currently in use will also be replaced
at a later date with a permanent cage and skips.
The gathering pond for storm water was
completed in the September quarter, and the
mine administrative building will be finished in
the December quarter. The workshops and the
permanent canteen are scheduled for completion
around March 2015 and the two grades of ore-
product storage facility will be completed in late
2015.
The feasibility study for a gas pipeline has
been completed and a 220 kV substation, and an
agreement has been made with Gazprom to
provide the gas for the site.
Infrastructure
A greenfield project such as Usolskiy requires a
lot of infrastructure including office buildings,
staff accommodation, transport connections and
power lines. EuroChem has invested heavily on
infrastructural developments for the region.
A high voltage 220/10kV electricity line from
Yavinskaya substation to the processing plant
has been developed along with further electricity
distribution lines and communication networks.
This along with a 220/10kV substation on the
site has been developed, which powers the sites
freezing needs.
Work has also commenced for the sites core
220/10kV substation, and design works are
underway for a gas distribution station, an
external gas pipeline and a gas distribution
system for the processing plant.
The ore will be transported away from the site
via one of the 64 railcars, which can carry 78 t of
potash. Over 48 km of railways are also being
developed to connect the plant to the mainline.
For seaborne transportation the Ust-Luga port,
which is some 1,600 km away, will be used. The
port is located on the Russian coast in the Gulf of
Finland, where a EuroChem terminal with a
transhipment capacity of 5 Mt is currently under
construction, and is expected to come online in
two years.
Personal, social and environmental
developments
There are a number of industrial operations
around Berezniki attracting local employees.
EuroChem aims to develop itself as the most
attractive employer in the region and says it
wishes to develop a mutually beneficial
relationship with the local communities with the
development of the Usolskiy project. Due to the
large number of industrial operations, there is
stiff competition between companies to offer
safe and high quality working environments,
which is why so much consideration has gone
into offering the best working conditions along
with high quality social and educational
programs.
As the mine develops there will be a great
increase in the number of available jobs. In 2008,
during the very first stages of development,
EuroChem employed 17 people, in 2014 331
people, and it is expected that 2,416 people will
be employed by first output in 2017, and
reaching a peak of 3,150 employed people during
production in 2021.
Bailey noted that the site of Berezniki is well
suited to the development of an industrial
operation: “Berezniki has some infrastructure
already that we needed, but it is still a small city
with a lot of industry support.”
Education is considered as an essential social
program, and EuroChem has commenced
employer-sponsored education. Currently 112
students have accommodation and on the job
training provided by EuroChem, but over the
coming months and years there is an aim to
increase employer-sponsored education with
scholarships for senior students and
arrangement of on-the-job and pre-graduation
practical training.
Throughout the mine development there has
also been involvement with local university
specialists and students who assist with the
ongoing design and exploration work at Usolskiy
and other EuroChem operations.
Construction of residential and social facilities
was required in the region to support the
growing numbers of employers needed at
Usolskiy. Housing for 3,000 people was essential
along with social facilities such as a kindergarten
for 260 children, a sports centre, a training
centre, and a shopping mall. The development
will take place between 2014 and 2019 at a cost
of €51 million
Environmental monitoring programs are in
place for the project and a salt dump and salt
pile has been constructed at the mine site to
reduce environmental pollution with industrial
waste, and approximately 70% of waste will be
stored in these. The construction of a biological
treatment plant is also being carried out, which
will treat domestic waste water which will be
collected from all UKK facilities by a sewerage
network. A solid domestic waste landfill is also
being created to provide sanitary and
epidemiological safety as well as environmental
safety. Waste from the plant and the nearest
inhabited areas in the Usolskiy district will be
dumped. Following abandonment of the waste
landfill, the area will be recultivated with forest
planting.
EuroChem has also made the environmentally
conscious decision of leaving minimal tailings at
the site, with a majority of them being backfilled
into the mine. Other actions such as the release
of 50,000 baby sterlets in the local waters to
encourage the redevelopment of healthy
biodiversity into the industrial region. IM
00 International Mining | NOVEMBER 2014
OPERATION FOCUS
Excavation is underway on the loading and
haulage section