Dear shareholders,

2013 was a challenging year for both your Company and the potash industry as a whole. As the year unfolded, it became clear that global demand for potash was subdued and well down on previous years. Global oversupply resulted in more intensive competition which led to a progressive reduction in price. Uralkali, whilst seeking to maintain price over volume approach, was losing market share to its competitors, which resulted in a much reduced capacity utilisation during the first half of 2013. Whilst this allowed the execution of necessary maintenance, repair and expansion projects, the Company decided in July 2013 to adjust its approach to the market to restore its leading global position. This was substantially achieved during the remainder of the year with rising sales supported by increased levels of production.

In parallel with these market developments, our longstanding and successful cooperation with Belaruskali through Belarusian Potash Company (BPC) came under increased pressure. The Company concluded that the longstanding basis for cooperation was no longer well founded and terminated its participation in BPC.

During 2013, the Company continued to improve its cost leadership position, enhance its global distribution networks to serve customers, and develop and apply international best practices in all of its activities.

Shareholder returns and share buyback

Despite the unfavourable market conditions and weaker financial performance, Uralkali generated solid cash flow and maintained the Company’s dividend policy, which provides for the payment of not less than 50% of net income as dividends. In June 2013, the Annual General Meeting resolved to pay dividends for 2012 in the amount of US$ 0.61 per GDR. Overall, around US$ 789 million was allocated for dividend payments for 2012. In addition, in December 2013, an Extraordinary General Meeting approved interim dividends in the amount of approximately US$ 197 million.

On 13 November 2013, the second buyback programme of shares and GDRs was completed. It amounted to US$ 1.25 billion, with the purchased shares to be cancelled in accordance with corporate best practice. The buyback programme took place over the course of a two-year period as part of the Company’s long-term commitment to maximise shareholder value.

The Company will continue to look for ways to optimise its shareholder distribution policy.

Ownership structure

During 2013, Uralkali’s ownership structure changed significantly.

In June, the Board of Directors approved the purchase of the Company’s shares beneficially owned by Zelimkhan Mutsoev. Mr. Mutsoev sold his securities portfolio to focus on his political career, giving Uralkali an opportunity to purchase shares at a significant discount to the prevailing market price.

In July, the ICT Group of companies notified Uralkali that its President, Alexander Nesis, had sold his stake in the Company.

In September, Chengdong Investment Corporation (CIC) acquired a 12.5% stake in Uralkali. CIC’s involvement in Uralkali’s share capital was a positive signal to the investment community, demonstrating the fundamental attractiveness of the potash industry.

In December, ONEXIM Group announced the acquisition of 21.75% of Uralkali shares from the Suleyman Kerimov Foundation. At the same time, URALCHEM notified the Company about the acquisition of 19.99% of its shares.

Thus, by the end of the year, a number of new key shareholders had joined the Company, including ONEXIM Group, URALCHEM and CIC. I am pleased to welcome all new shareholders and we hope that their involvement in the Company will begin a new chapter in its history.

In March 2014, a new Board of Directors was elected. I am sure the new Board will continue to work for the benefit of all shareholders, staying committed to the best practices of corporate governance.

Management of the Company

In August 2013, following the termination of Uralkali’s participation in BPC, Uralkali CEO Vladislav Baumgertner was detained in Belarus, and later extradited to Moscow where he remains under house arrest. We thank Vladislav for his many years of sound leadership of the Company and his commitment to transform Uralkali into a world leader in the potash industry.

Following an interim period with Viktor Belyakov in charge, Dmitry Osipov, an experienced executive from the fertiliser industry, was appointed CEO of the Company in December 2013. We all wish Dmitry every success in the role and believe his in-depth understanding of the industry and a fresh approach to delivering Uralkali’s strategy will lead the Company’s development forward.


The external environment, as we progress through 2014, looks increasingly challenging. The Company, however, is well positioned as global potash demand recovers and will continue its leadership to solve the needs of the agricultural industry and contribute to global food security.

I was glad to work in such an interesting industry and excellent company. I thank my colleagues and Uralkali’s team and wish the Company all the best.

Alexander Voloshin

Chairman of the Board of Directors Independent Director