Uralchem Cancels IPO After Failing to Meet Ecological Standards

MOSCOW, May 20, 2010 - A group of NGOs has been sounding warnings over one of this year's
largest IPOs before the offering was called off. The preliminary offering
prospectus of Russian chemical fertilizers producer Uralchem glossed over
serious environmental and legal risks, said the coalition of NGOs
(Socio-Ecological Union, Russia; BankTrack, Netherlands; Les Verts, France;
Platform-London, UK; The Berne Declaration, Switzerland; International
Accountability Project, USA; Fond Grazhdanin, Russia). Their research
uncovers significant violation of environmental regulations by the company,
which could lead the Russian Ministry of Natural Resources to force plant
closures.

The coalition addressed the IPO bookrunners (UBS, Morgan
Stanley, and Renaissance Capital) with an open letter urging them only to
support the IPO if the company seriously commits to resolving its social and
environmental problems. According to the report, Uralchem's disregard for
environmental safety has lead to several fatal accidents in the past year,
and seriously damages the quality of air and water in the towns of
Kirovo-Chepetsk, Voskresensk and Berezniki.

In Voskresensk, a 200m tall mound of phosphogypsum, illegally
heaped by Uralchem's plant, threatens to leak toxic phosphoric acid into
Moscow River. In 2010 alone, the Russian Ministry for Natural Resources made
three announcements that may herald a criminal court case against Uralchem
and its Voskresensk plant. This is only one in a host of problems
(environmental crimes, financial machinations, neglect of equipment and
employees, and various corresponding court cases) that, according to the
NGOs, should ring loud alarm bells for the company's bookrunners and
potential future investors.

Uralchem's plans to build a reprocessing plant in Dieppe,
France, not only met strong resistance from locals and environmentalists (Les
Verts, Europe Ecologie) but also attracted the attention of a number of MPs.
This political risk was likewise overlooked by the preliminary offering
prospectus.

Commenting on postponement of the IPO, Maxim Shingarkin,
representative of Socio-Ecological Union, said: "We would like to warn
investors who plan to put their money in a company with such a reputation in
the future. We think that the money made on the IPO will be used to pay off
the company's debts, while Uralchem's plants continue to choke whole towns
and produce fertilisers which fail quality control by the lorry load."

Socio-Ecological Union is an international, nongovernmental,
nonprofit public ecological association.

CONTACT: Maxim Shingarkin, Socio-Ecological Union, +7-495-6083094

www.seu.ru

CONTACT: Maxim Shingarkin, Socio-Ecological Union, +7-495-6083094