Updated August 11, 2008

   Uralkali, Russia's potash producer, can spend around 70% of the company net income by RAS standards (Russian Accounting Standards) to pay dividends for 1H 2008. The company does not have any large projects for the nearest four years, so by 2012 stockholders can expect high payments, while the core rivals reduce dividends for capital investments.

According to the year results, Uralkali dividends can

total almost RUR 20 billion.

   JSC Uralkali directors' board approved recommendation for an extraordinary stockholders meeting on interim dividends payment at RUR 4 per stock, reported in the company. Voting passes by default, stockholders bulletins are accepted

by September, 18.

Thus, as per activity results in 1H 2008, Uralkali intends to direct RUR 8,45 billion to pay dividends.

   JSC Uralkali is one of the largest world producers of potassium chloride (KCl). In 2007 the company produced more than 5,1 million tons of potash fertilizers.

Dmitry Rybolovlev, chairman of the company directors' board, owns around 65,63% stocks. In 2007 the company revenue totaled RUR 29,5 billion by IFRS standards (International Financial Reporting Standards), net income was RUR 8,04 billion.

   If Uralkali stockholders approve the recommended dividends size, they will get 68% from the company net income by RAS standards

for 1H 2008, i.e. interim dividends for six months will more than twice exceed dividends for 2007(RUR 4,036 billion or RUR 1,9 per stock). Uralkali is traditionally paying large dividends, as its dividend policy requires this (minimum 15% of consolidated income). So, payments for 2007 totaled 67% from net income by RAS (around 50% by IFRS standards).

   Uralkali core rival – JSC Silvinit accepts recommendations on dividends.

For 1H 2008 the company can pay RUR 2,3 billion its stockholders (in RUR 220 per stock), is said in materials for directors' board. If stockholders approve recommendation during their meeting in mid-September, Silvinit will pay 17,9% from net income by RAS standards. But in 1H 2007 Silvinit dividends stake in the company net income was considerably higher – 82,7% (RUR 2,61 billion in natural terms).

   As explained Renaissance Capital analyst Marina Alekseenkova, now, despite chemical companies' stocks drop, prices on potassium and other fertilizers are quite high.

In her opinion, furt

her dividends payments in the industry will depend on further plans of companies concerning assets purchase. "Uralkali generates money quite good, and if the company does not make large purchases within the nearest future, its dividends level can keep", an analyst supposes.

   Veles Capital Investment Company analysts Dmitry Lyutyagin forecasts Uralkali net income at RUR 39,5 billion level for current year by IFRS standards, and this figure is almost five times

higher than the 2007 level.

If make a comparison with last year and the company decides to direct 50% of its net income to pay dividends, payments for current year can total almost RUR 20 billion. In the analyst opinion, in terms of keeping capital expenditures at RUR 6 billion level, within the nearest years stockholders can expect higher payments.

"Uralkali has lost a battle to Silvinit for Polovodovsky area, and now it has nowhere to forward its facilities", he says. According to Mr.

Lyutyagin calculations, the company expects expenditures peak in 2012-2013, when Uralkali plans to launch new objects. Dividends size can go down by this time.