6 The key value driver – our potash story continues

• Global potash sales fully recovered in 2010 and reached 53 MMT of KCl. Global potash market conditions may tighten in 2011, with potash deliveries projected to come in at 55-56 MMT of KCl
• EuroChem is one of the few companies making real progress on greenfield projects in Russia and globally, and plans to develop both licenses on its own
• Most Russian capacity expansions (especially greenfield) delayed due to financing issues. Existing players focused on ownership changes
• Prices bottomed in early 2010, with China and India contracts at USD 350 and USD 370/tonne CFR, respectively. Although spot prices have since rebounded, contract prices have only recently begun to move up
• In the beginning of 2011, BPC concluded a 6-month contract with Chinese buyers at USD 400/tonne CFR; spot prices in Brazil and Asia hovered around USD 430-450/tonne CFR
• China and Brazil have demonstrated interest and ability to enter the potash sector through state-owned or stateinfluenced companies, a reaction to the consolidated supply structure of the industry
• K+S acquired a majority stake in Potash One and plans to start production with a capacity of 2.7 MMT p.a. by 2015 by solution mining
• Consolidation in Russia (Uralkali/Silvinit) increases global potash supply concentration
• BHP Billiton fails to acquire PotashCorp as Canadian authorities block the bid

• EuroChem has the only major greenfield project likely to come on line by 2014 (Gremyachinskoe phase I: 2.3 MMT p.a. capacity)
• Major brownfield expansions planned by Canpotex members include PotashCorp (6.1 MMT p.a.) and Mosaic (1.4 MMT p.a.)*
• Brownfield expansions expected at Uralkali and Silvinit (2.4 MMT p.a.)

* Source: Fertecon.

Strengths

• Vast reserves (estimated over 3.0bn tonnes*): fifth globally
• Close location of Gremyachinskoe deposit to Black Sea ports
• High nutrient content in reserves: Gremyachinskoe deposit average 37% KCl, Verkhnekamskoe deposit average 30% KCI
• Both deposits – Gremyachinskoe and Verkhnekamskoe – are located in areas with existing infrastructure
• Preliminary calculations place EuroChem among the leaders on the cash cost curve
• Own transhipment terminal

Weaknesses

• Limited in-house experience in mining may lead to higher costs due to need to engage subcontractors for planning and construction of mines and processing facilities

Opportunities

• Become one of the leading players in potash, with up to 8.0 MMT p.a. production capacity currently planned
• Use advanced technology for shaft sinking and enrichment, resulting in lower cash cost per tonne of production

Threats

• Prolonged, significantly worse-than-expected market conditions could negatively affect EuroChem’s ability to continue financing these investment projects
• Significant risks involved in sinking mineshafts to 1,200 meters below surface, through water layers and other challenging geological conditions

* A+B+C1 according to Russian reserves classification.