QUARTERLY REPORT Open Joint-Stock Company Uralkali for the ...

Despite some reduction of demand on the global market of potash fertilizers in the I quarter of 2012, the
market returned to its normal volumes in the II quarter due to high demand in Brazil and seasonal burst of
consumption in the USA, in the countries of Europe and Asia. At the same time, the third quarter features
some reduction of volumes of shipment of potassium due to reduction of consumer activities on the main
markets of India and China. Despite this, analysts forecast preservation of volume of world consumption of
potash chloride in the current year on the level of indicators of 2011.
The prices for potash fertilizers considerably depend on supply in the market of potash fertilizers and also on
the production level and oversupply, as well as increased level of potash fertilizer production can have a
negative impact on the Issuer’s activity.
2.4.2. Country and Regional Risks
In the event of any of the risks stated below the Issuer shall take all possible measures to
minimize adverse effects. The taken measures will depend on peculiarities of the situation in each specific
case. The Issuer cannot guarantee that the actions taken to get over negative changes can remedy the
situation because the specified factors are out of the Issuer’s control.
In case of political or economic instability in Russia or in any specific region that might
have an adverse impact on the Issuer’s activity and profit, the Issuer shall take a number of anti-crisis
management measures in order to mobilize activity and decrease as much as possible the adverse impact of
the political or economic situation in the country or in the region.
Nevertheless, in case of a negative impact of the country and regional changes on the
Issuer’s activity, the Issuer is taking the following general measures to maintain the Issuer’s activity:
- To take measures intended to assure workers’ creature comforts and the Issuer’s working capacity;
- To maintain permanent assets to the extent possible until the situation changes for the better;
- To optimize expenses;
- To reconsider an investment program.
1. Risks related to the political and economic situation in the country and in the region where the Issuer is
registered as a taxpayer and/or undertakes its main activity.
The Issuer’s country risks are determined by social, political and economic risks appropriate for Russia and
international financial rating of Russia that are out of the Issuer’s control.
In recent years positive changes in social spheres has taken place in Russia – political
stability has been achieved, some economic reforms have been implemented.
The economies of the developing countries, including the economy of the Russian
Federation, considerably depend on a business environment of the developed markets and in case of money
stock outflow from the developing markets their rate of economic growth will decrease essentially. The
possibility of economic destabilization in Russia caused by a fall in oil prices cannot be totally discounted.
Stability and development of the Russian economy mainly depend on effectiveness of the
economic measures taken by the government of the Russian Federation. The government has not yet
completed reforms in banking, judicial, taxation and administrative systems. Any of the risks stated below that
the Russian economy was subject to in the past can have a considerable effect on the investment climate of
Russia and the Issuer’s activity. In the past, the Russian economy suffered from the following negative
phenomena:
- Heavy drop of the gross domestic product;
- Hyperinflation;
- Instability of the currency;
- High government debt in relation to the gross domestic product;
- Weak banking system providing limited liquidity support to Russian enterprises;
- High percent of unprofitable enterprises continuing their activity due to deficiency of an effective
bankruptcy procedure;
- Wide use of inter-scoring schemes and non monetary methods of payment in commercial
transactions;•
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