$65 million loan to Russia potash producer for export terminal

A four-year, $65 million loan from the European Bank for Reconstruction and Development will allow Russia ’s biggest producer of potassium fertilizers to acquire full control of the maritime terminal through which the company ships the bulk of its sea-bound exports.

The EBRD remains lender of record for the full amount, but $30.5 million has been syndicated to three commercial banks and one fund management firm under an EBRD A/B loan structure, with Raiffeisen Zentralbank Österreich AG (RZB-Austria) and WestLB acting as arrangers and taking $10 million each. A further $5.5 million was syndicated to Cordiant and the remaining $5 million to Raiffeisenlandesbank Niederösterreich-Wien.

Cordiant, formerly International Finance Participation Trust Management Inc., is a fund management firm specializing in private-sector investments in emerging markets.

The four-year loan will enable Uralkaly to establish full ownership over the Baltic Bulk Terminal, a state-of- the-art transshipment and storage facility for mineral fertilizers near St Petersburg whose construction was aimed at cutting the Company’s transportation costs. The terminal, which will have a capacity of 5.5 million tonnes, is nearing completion.

The proposed consolidation of the Baltic Bulk Terminal by Uralkaly will enhance its ability to provide a high-quality service to international customers, said Victor Pastor, Director of the EBRD’s Russia team.

This is the EBRD’s second loan to Uralkaly. In 2003, the Bank made a seven-year loan of $75 million to finance acquisition of the company’s own power generators, specialised railcars to transport potassium fertilizer and mining equipment, $50 million of which was syndicated to five commercial banks.

Uralkaly is located in the city of Berezniki , some 1,200 km to the east of Moscow in the northern Urals. It is the world’s fourth largest producer of potash and operates three mines and four potassium rock enrichment facilities, employing in all 16,000 people.

The company exports some 85 per cent of its production, mainly to China , India and Brazil. The growing demand for fertilizers, particularly in China and India where they are needed for the cultivation of soya, is one of the main forces driving the international market for potash.