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Uralkali — Nourishing the Earth Uralkali Nourishing the Earth

• Analyst Presentation

20 August 2007

2010 IFRS fi i l lt d tl k

DRAFT No.1

g Moscow

2010 IFRS financial results and outlook

Conference Call Presentation April 1 2011 April 1, 2011

Disclaimer

This presentation has been prepared by JSC Uralkali (the «Company») Information in relation to OJSC Silvinit (“Silvinit”) has been provided to the This presentation has been prepared by JSC Uralkali (the «Company»). Information in relation to OJSC Silvinit ( Silvinit ) has been provided to the Company by Silvinit, and the Company has not verified such information. By attending the meeting where the presentation is made, or by reading the presentation slides, you agree to the following limitations and notifications. With respect to any information communicated by the Company, its agents or its representatives (including its directors, officers, employees, members, attorneys, advisors and any affiliates) to you or your agents or representatives (including any directors, officers, employees, members, attorneys, advisors and affiliates), directly or indirectly, whether in written, oral, visual, electronic or any other form, during or constituting the whole or part of this presentation

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• r any member of its group must inform himself or herself independently before taking any investment decision. The Information communicated has been

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• Company. These statements involve numerous assumptions regarding the present and future strategies of the Company and the environment in which it
• perates and will operate in the future and involve a number of known and unknown risks and other factors that could cause the Company’s or its

industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or industry s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Accordingly, the Company provides no assurance whatsoever that its or its industry’s actual results, levels of activity, performance or achievements will be consistent with the future results, levels of activity, performance or achievements expressed or implied by such forward looking statements. Neither the Company nor any of its directors, officers, employees, members, attorneys, advisors, affiliates or any other person intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances

• n which any such statements are based.

1

Multiple factors could cause the actual results to differ materially from those contained in any projections or forward-looking statements, including, among

• thers, potential fluctuations in quarterly or other results, dependence on new product development, rapid technological and market change, acquisition

strategy, manufacturing risks, volatility of stock price, financial risk management, future growth subject to risks of political instability, economic growth and natural disasters, wars and acts of terrorism.

1

Agenda 1 Creation of a Leader in the Global Potash Market Update

• 1. Creation of a Leader in the Global Potash Market – Update
• 2. Uralkali 2010 Financial Results
• 3. Silvinit 2010 Financial Highlights
• 4. Financial Position
• 5. Potash Market Update

6 Conclusions and Outlook

• 6. Conclusions and Outlook

2

Creation of a Leader in the Global Potash Market

1

Combination approved by shareholders of both companies on 4 February 2011 EGM results reflect strong endorsement of the compelling rationale underlying the combination Votes in favour:

Significant progress has been made since announcement of the transaction

Shareholder Approval

Votes in favour: Uralkali - 98.9%1 Silvinit - 90.9%1 Redemption requests minimal: Uralkali - US$0.87m Silvinit US$1 71m (ords and prefs) Completed Silvinit - US$1.71m (ords and prefs)

Financing

Funds secured through bonds placement and loan facility Placement of debut exchange traded bonds - 30 billion roubles (three year maturity) Loan facility - 12 billion roubles (two year maturity) Improvement in loan portfolio through lengthening average maturity Completed p p g g g g y Cross-currency interest rate swap associated with both instruments

20% Acquisition

20% acquisition from Otkritie Securities Limited completed on 28 February 2011 Completed

FAS and Other Antitrust Approvals

Brazil: unconditional approval received Federal Antimonopoly Service (Russian Federation) and other anti-trust applications have been filed Ongoing / Partially Completed

UKLA Re-listing

Workstreams ongoing associated with reapplication for admission of GDRs to the Official List of the UKLA i l di b i i f t O

UKLA Re listing Requirements

UKLA, including submission of a prospectus Admission to occur simultaneously with completion Ongoing

Acquisition of 20 per cent. stake completed on 28 February 2011 3 q p p y Proposed Merger remains on-track, expected to be completed by the end of May 2011

Notes: 1. Percentage of votes cast at the EGM voting in favour of the statutory merger. Uralkali shareholders also voted in favour of the acquisition of the 20% stake and the associated financing

Agenda 1 Creation of a Leader in the Global Potash Market Update

• 1. Creation of a Leader in the Global Potash Market – Update
• 2. Uralkali 2010 Financial Results
• 3. Silvinit 2010 Financial Highlights
• 4. Financial Position
• 5. Potash Market Update

6 Conclusions and Outlook

• 6. Conclusions and Outlook

4

Uralkali Key Financial Highlights – 2010

2

IFRS Financial Results Key Metrics

54.4 60

Net sales, bln RUR

76% 80%

• Adj. EBITDA margin, %

Units: RUR mln 2010 2009 Change, %

16.7 22.7 29.3 40.6 20 30 40 50 51% 53% % 56% 60% 30% 40% 50% 60% 70% 80%

Production, Mt 5.1 2.6 93% Sales, Mt 5.1 2.5 103%

• f which domestic sales, Mt

0.7 0.6 14% Gross sales 51 592 33 809 53%

10 2006 2007 2008 2009 2010 0% 10% 20% 2006 2007 2008 2009 2010

Potash sales structure by sales Sales volume Mt

Gross sales 51,592 33,809 53% Net sales1 40,603 29,231 39% Adjusted EBITDA2 24,298 16,375 48% margin, % 3 60% 56%

India 16% China sea China rail 15% Other 2%

volume, 2010

5.1 4.7 5.1 4.3 4 5 6

Sales volume, Mt

Net profit 16,654 9,095 83% Operating cash flow 21,218 4,472 374% Capital expenditure 10 257 14 105

• 27%

S-E Asia 14% USA 14% Russia 13% Brasil 4% 8% Brazil 2.5 1 2 3

Capital expenditure 10,257 14,105 27% Expan./maint. proportion 58/42 47/53

Notes: Europe 14%

2010 saw a significant recovery of volumes and margins with capacity utilization reaching 93%

2010 2009 2008 2007 2006 1. Based on adjusted sales (sales net of freight, railway tariff and shipping costs) 2. Adjusted EBITDA is calculated as Operating Profit plus depreciation and amortization and does not include mine flooding costs 3. EBITDA Margin is calculated as EBITDA divided by Net Sales

5

Uralkali – Review of Cost Structure 2010

2

Distribution costs Cash COGS

Potash cash COGS1

70 80

Distribution cost structure, 2010

Transport Other 58 70 51 20 30 40 50 60 70 US$ per tonne Freight 47% Transhipment 3% Transport repairs 5% Other 8%

Cash COGS2 structure 2010

10 20 2008 2009 2010 U

China and SPb effective railway tariff4 Effective freight rates3

47% Railway tariff 37% 67 55 58 50 60 70 80 tonne)

Cash COGS structure, 2010 China and SPb effective railway tariff Effective freight rates

Production materials 7% Materials for repairs 15% Outsourced repairs 15% Transportation between mines 4% Other 1%

1 569 1 779 1 200 1 400 1 600 1 800 2 000

• nne)

China SPb

10 20 30 40 (US$ per t 15% Labour cost 33% Fuel and energy 25% 15%

812 897 200 400 600 800 1 000 (RUR per to

2008 2009 2010 Notes:

Significant improvement in cash costs in 2010 driven by increase in volumes and management’s continued focus on costs

33%

• 2009

2010

Notes: 1. Total cost of sales for potash sales (refer to Note 7. Segment reporting in the Consolidated IFRS Account) less depreciation in COGS (refer to Note 14). Depreciation is divided proportionally between Potash and Other sales. (Total Cash COGS 2010 – US$56 per tonne vs. US$80 per tonne in 2009) 2. Cost of goods sold less depreciation 3. Effective freight rates are calculated as freight cost divided by freight volumes 4. Effective railway tariff includes both loaded and empty railcars fares

6

Capex and Cash Flow 2010

2

Capex Cash Flow

Capacity Addition Program Operating Cash Flow vs. Capex2

32.6 35 7 0 8 Capacity

+ 1,5 Mt increase associated with brownfield

12.3 21.2 14.3 14.1 10.3 15 20 25 30 35 (bln RUR Operating cash flow Capex 5.1 5.3 5.5 5.5 5.5 7.0 3 4 5 6 7 (Mt of KCl) Capacity

associated with brownfield expansion at Berezniki-4

5 10 2008 2009 2010 ( 1 2 2007 2008 2009 2010 2011E 2012E (

Dividend payout ratio Capex evolution, bln RUR

80% 100% 14.3 14.1 10.3 12.5 12 14 16 50% 39% 40% 20% 40% 60% 2 4 6 8 10 (RUR bln)

Cost-effective capacity addition programme will increase capacity by 27% in 2012

0% 2007 2008 2009 Dividend payout ratio Dividend payout policy: 15%

1

2008 2009 2010 Average 11-12E Expansion Maintenance

7

Notes: 1. Mine 5 is not included 2. Operating Cash Flow for 2009 was adjusted for the amount of compensations related to Mine-1 flooding, paid in 2009 (7.8 bln RUR)

p y p g p y y

Agenda 1 Creation of a Leader in the Global Potash Market Update

• 1. Creation of a Leader in the Global Potash Market – Update
• 2. Uralkali 2010 Financial Results
• 3. Silvinit 2010 Financial Highlights
• 4. Financial Position
• 5. Potash Market Update

6 Conclusions and Outlook

• 6. Conclusions and Outlook

8

Silvinit Key Highlights – 2010

3

IFRS Financial Results Key Metrics

50 5 60

Net sales, RUR bn

74%

• Adj. EBITDA margin, %

Units: RUR mln 2010 2009 Change, %

34.9 32.1 50.5 20.0 20 30 40 50 53% 66% 74% 46% 30% 40% 50% 60% 70% 80%

Production, Mt 5.1 3.5 45% Sales, Mt 4.9 3.6 39% % of domestic sales 21% 27% Sales (net of export duties) 39 025 33 734 16%

Cash COGS structure, 2010 Potash sales structure by sales

10 2010 2009 2008 2007 0% 10% 20% 2010 2009 2008 2007

Sales (net of export duties) 39,025 33,734 16% Net sales1 34,925 32,083 9% EBITDA2 18,335 21,307

• 14%

margin, % 3 53% 66%

volume, 2010

Labour costs 34% Repairs and maintainance 16% Brasil 4% India 16% Other 2% Russia 21% Brazil

Net profit 11,532 10,518 10% Operating cash flow 12,917 12,788 1% Capital expenditure 4,168 5,570

• 25%

Materials and components used Fuel and energy 21% China 20% Asia 21% USA 5% Europe 11% 2%

Capital expenditure 4,168 5,570 25%

Silvinit demonstrated solid growth in 2010 with sales volumes increasing by 39% and virtually full capacity utilisation

used 29% 21% Notes: 1. Based on adjusted sales (sales net of export duty, freight, railway tariff and shipping costs) 2. In 2010 Silvinit had extraordinary and one-off expenses in relation to disposal of VSK and SMZ, ships write-off and legal provisions in total amount of 3.9 bn RUR 3. EBITDA Margin is calculated as EBITDA divided by Net Sales

9

Agenda 1 Creation of a Leader in the Global Potash Market Update

• 1. Creation of a Leader in the Global Potash Market – Update
• 2. Uralkali 2010 Financial Results
• 3. Silvinit 2010 Financial Highlights
• 4. Financial Position
• 5. Potash Market Update

6 Conclusions and Outlook

• 6. Conclusions and Outlook

10

YTD Financial Position Update

4

Uralkali Financial Position

• Acquisition financing secured:

Significant balance sheet changes YTD

Units: RUR mln 31 Dec 10 31 Dec 09 Change, %

• Exchange traded rouble bonds ~30 bln roubles,

8.25% coupon, three years maturity

• Sberbank loan facility ~12 bln roubles, two years

maturity

Debt 11,253 13,463

• 16%

Cash 14,765 4,297 244% Net cash/(debt)1 3 512 (9 166) 138%

maturity

• Improvement in loan portfolio through lengthening maturity
• Cross-currency interest rate swap associated with both

instruments

Silvinit Financial Position

Net cash/(debt)1 3,512 (9,166)

• 138%

EBITDA adjusted 2 24,298 16,375 48%

instruments

• Average loan portfolio interest rate ca. 4.4% (in US$)

Units: RUR mln 31 Dec 10 31 Dec 09 Change, % Debt 45,546 49,019

• 7%

Cash 6,289 4,49 40% Net cash/(debt)1 (39,257) (44,529)

• 12%

EBITDA3 18 335 21 307 14%

Robust capital structure retained; medium term target net debt/EBITDA ratio of 1.0 – 2.0x LTM EBITDA

EBITDA3 18,335 21,307

• 14%

11

Notes: 1. Net cash position is calculated as cash and cash equivalents (including deposits) minus bank loans 2. Adjusted EBITDA is calculated as Operating Profit plus depreciation and amortization and does not include mine flooding costs 3. In 2010 Silvinit had extraordinary and one-off expenses in relation to disposal of VSK and SMZ, ships write-off and legal provisions in total amount of 3.9 bn RUR

Agenda 1 Creation of a Leader in the Global Potash Market Update

• 1. Creation of a Leader in the Global Potash Market – Update
• 2. Uralkali 2010 Financial Results
• 3. Silvinit 2010 Financial Highlights
• 4. Financial Position
• 5. Potash Market Update

6 Conclusions and Outlook

• 6. Conclusions and Outlook

12

Crop prices are expected to stay elevated

5

4,000 5,000 16 20 )

• Tight supply-demand situation and decreasing inventories

expected to provide substantial support to crop prices throughout 2011

• Any supply disruptions due to unfavorable weather

Crop futures prices

1,000 2,000 3,000 4 8 12 (MYR/tonnes) (US$/bu)

y pp y p conditions will add further upward pressure (e.g. persistence

• f La Niña)
• Farmers’ income expected to remain strong in 2011 with

crop prices close to historical highs

Jan'00 Jan'01 Jan'02 Jan'03 Jan'04 Jan'05 Jan'06 Jan'07 Jan'08 Jan'09 Jan'10 Jan'11 Corn Soybeans Wheat Palm Oil

• Robust pricing environment expected to continue in 2012

with crop prices expected to remain elevated compared to 2010 levels

S CBOT B M l i

Corn stock-to-use ratio Soybeans stock-to-use ratio Wheat stock-to-use ratio Palm oil stock-to-use ratio

Sources: CBOT, Bursa Malaysia 30% 35% 40% 30% 35% 40% 30% 35% 40% 30% 35% 40% 0% 5% 10% 15% 20% 25% 30% 0% 5% 10% 15% 20% 25% 30% 0% 5% 10% 15% 20% 25% 30% 0% 5% 10% 15% 20% 25% 30% Source: USDA Source: USDA Source: USDA Source: USDA

Agriculture industry remains strong; highly attractive crop market dynamics with 2011 expected to see

0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

13 g y g; g y p y p farmers’ income close to historical highs

Strong Demand Growth in 2010

5

...Expected to continue in 2011 / 2012 Strong Demand Growth witnessed in 2010…

10 0 9.2 57 58 60 62 capacity production sales Capacity Production Sales 10.0 12.4 6.5 5.6 6.1 China

• N. America

3.6 42 44 47 52 52 49 56 52 29 55 57-58 60-62 9.2 5.7 8.0 EMEA SE Asia & Oceania India 5.5 3.3 29

• L. America

54.9 Source: Companies and BPC data, BPC estimates 43 44 46 52 54 49 55 54 32 50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010е 2011f 2012f

• Worldwide

potash sales volumes are expected to range

2010 demand, Mt 2009 demand, Mt 30.2

Worldwide potash sales volumes are expected to range between 57-58 Mt in 2011, representing a full recovery to pre- crisis levels

• Future growth anticipated in 2012 with potash demand expected

to reach 60-62 Mtpa

Source: IFA

2011 expected to see potash sales exceeding pre-crisis level with further growth anticipated in 2012 with

World Total

• Healthy farmer economics and re-stocking point to improved

supply/demand dynamics into 2011-2012

14 p p g p g p capacity expected to increase in line with demand

Supply-Demand Dynamics Provides Supportive Pricing Environment

5

Pricing Environment

1,200 1,350 DAP US Gulf FOB Urea Yuzhny FOB MOP FSU FOB

L ti A i t h t t i h

750 900 1,050 /t)

Latin American potash contract prices have already experienced a significant increase, with BPC sale prices of $470/t CFR for April

• delivery. For May 2011 delivery, prices of up

to $520/t CFR can be expected according to BPC estimates

450 600 (US$/ 150 300

2010 saw relatively flat selling prices for potash versus other key fertilizers, including DAP. Q410 saw pricing recovery for potash

Jan 08 May 08 Oct 08 Mar 09 Jul 09 Dec 09 Apr 10 Sep 10 Feb 11

Source: FMB

We believe that the underlying drivers for potash prices remain unchanged compared to 2007-1H 2008 and will continue to be dictated by a combination of strong grain prices and higher industry operating rates than experienced in 2010

Favourable business environment is expected to become visible in 2011 / 2012 15

Potash Market Outlook

5

Att ti k t d i

Fundamentals continue to support the potash market

Attractive crop market dynamics 2011 expected to see prices close to historical highs Demand dri ers biof el increasing emerging market imports b llish oil price e pectations and

Agriculture industry remains strong

Demand drivers – biofuel, increasing emerging market imports, bullish oil price expectations and continuing economic recovery Potash demand expected to exceed pre-crisis levels in 2011 with further growth in 2012

Potash demand growth

Stocks remain below optimal levels Capacity expected to increase roughly in line with demand

Supply remains tight

Stronger prices should become more visible in 2011 / 2012

Supportive pricing environment

Highly attractive outlook for 2011 / 2012 16 g y

Agenda 1 Creation of a Leader in the Global Potash Market Update

• 1. Creation of a Leader in the Global Potash Market – Update
• 2. Uralkali 2010 Financial Results
• 3. Silvinit 2010 Financial Highlights
• 4. Financial Position
• 5. Potash Market Update

6 Conclusions and Outlook

• 6. Conclusions and Outlook

17

Conclusions and Outlook

6

Creation of a Leader in the Global Potash Market

Significant progress made since announcement of the transaction EGM voting results and minimal redemption requests 20% stake acquisition completed; on-track to complete merger by end of May 2011 2010 t i l d i f b th U lk li d Sil i it

2010 Financial Results

2010 saw strong recovery in volumes and margins for both Uralkali and Silvinit Sales Volumes: Uralkali: 5.1 Mt (+103% vs. 2009) Silvinit: 4.9 Mt (+39% vs. 2009) EBITDA: EBITDA: Uralkali: 24.3 bn RUR (+48% vs. 2009) Silvinit: 18.3 bn RUR (-14% vs. 2009)

R b B l Sh

Funds secured through bonds placement and loan facility

Robust Balance Sheet

Group’s capital structure remains robust; goal to keep net debt to range of 1.0x-2.0x LTM EBITDA over the medium term

Market Outlook

Industry fundamentals are highly attractive with excellent demand growth prospects Crop prices expected to stay elevated in 2011 / 12

Market Outlook

Global potash sales volumes expected to range between 57-58 Mtpa in 2011 Upward pricing trajectory set to continue during 2011

Key Near-Term Priorities

Completion of merger Integration, delivery of synergies

Key Near Term Priorities

Integration, delivery of synergies Delivery of operational improvements and near term capacity expansions

F d d li f th t d i h h ld l 18 Focused on delivery of growth to drive shareholder value

Thank You! Thank You!

19