UPDATE 2-Sinkhole may cut Russian potash supply again

(Adds Silvinit comments, Emergencies Ministry data)

By Simon Shuster

MOSCOW, July 14 (Reuters) - An emergency rail link allowing Russian potash miner Silvinit (SILV.RTS) to deliver the in-demand soil nutrient is likely to close in the next few weeks under threat from an expanding sinkhole, a senior engineer said on Monday.

Sergei Testov, chief engineer at a power station near the sinkhole, said the link could be disrupted for at least several weeks as the government considers options for a third rail spur to move potash from Silvinit's mine in the Ural mountains.

"We will do everything we can to build the new rail line before the old one is closed," Testov, one of the lead engineers in the rail link construction programme, told Reuters by telephone from Perm region.

"It probably won't be a disruption of two or three months, but for two or three weeks we will probably need to disrupt it."

Silvinit, which accounts for over 10 percent of global potash supply, reduced shipments of the soil nutrient last year after the collapse of a 50-year-old deposit owned by rival miner Uralkali (URKAq.L) opened up the sinkhole and cut its rail link.

The disruption to supplies caused potash prices to rocket to record highs on fears of a global shortage at a time when the fertiliser component is in high demand from farmers anxious to replenish dwindling global grain stocks.

Canada's Potash Corp of Saskatchewan (POT.TO) (POT.N), the world's largest potash miner, suspended new sales contracts temporarily in October on fears of a global shortage following the first disruption near the sinkhole. [ID:nN25321683]

"The situation is keeping us in suspense, but we are sure a crisis can be averted," said Anton Subbotin, chief spokesman for Silvinit.

EXPANDING SINKHOLE

Testov is chief engineer for Thermal Power Plant No. 10 in Perm region, part of power generating company TGK-9 (TGKI.MM). The plant is only a few hundred metres from the sinkhole, a crater 300 metres in diameter and 70 metres deep.

Both Testov and Subbotin said the hole was about 100 metres from the replacement rail link completed this year, and that it was spreading toward it. When it gets to within 75 metres, local safety officials would shut it down, they said.

The government is now examining a number of possibilities for a third rail spur to replace the one that will be closed.

"The alternative is still only in the planning stages," the engineer said. "Once the government makes a decision, in the best case scenario I think we can build it in three months."

At a tour of the power plant last week, Testov and plant director Alexei Maltsov said the sinkhole was expanding toward the rail line at about 10 metres per week -- meaning only two or three weeks remain before the line would need to be closed.

But on Monday, Testov revised this estimate, saying the expansion of the sinkhole had slowed. He declined to give a more specific estimate.

The Web site of the Perm branch of the Emergencies Ministry said the hole had not grown during the week ending July 4. (Additional reporting by Natalya Shurmina in Yekaterinburg, editing by Robin Paxton and Peter Blackburn)