(Adds 2010 production cuts, comments and background)
MOSCOW, Oct 30 (Reuters) - Russian potash miner Uralkali (URKA.MM) will cut production of potash fertilisers by 500,000 tonnes this year to 4.9 million tonnes due to adverse market conditions, it said on Thursday.
Its output for 2008 will therefore fall 8.4 percent short of its production capacity for the year of 5.35 million tonnes. The revised 2008 output also implies a 3.9 percent decline from last year, when Uralkali produced 5.1 million tonnes of potash.
In early 2010, Uralkali will also shut down one of its production lines in the Perm region for repairs, slashing the company’s maximum output for that year by more than 20 percent to 5.5 million tonnes from 7 million tonnes, it said in a statement.
Uralkali’s Belarus-based export agent, Belarussian Potash Company, supplies around a third of the world’s potash exports.
The move to curtail production in 2008 was prompted by the global credit crisis and its impact on demand for fertilisers.
The company previously reported an output rise of 7.3 percent in the first nine months of this year to 4.03 million tonnes.
“The decision ... is prompted by the current decrease in potash fertilisers purchase in the global market ... The planned reduction in production offers Uralkali a good opportunity to repair and modernise its facilities that for the last several years have been used at their full capacity,” it said.
“Liquidity crisis is hindering the farmers’ ability to purchase and use fertilisers,” it added.
Uralkali, whose billionaire majority owner Dmitry Rybolovlev is ranked Russia’s joint 12th-richest man by Forbes magazine, has said its first-half 2008 net profit more than tripled to $562 million as it hiked prices and demand for potash grew.
Potash prices reached record levels of around $1,000 per tonne in September, having quadrupled in the course of a year as record demand for the nutrient coincided with a supply shortage.
The soaring prices boosted shares in such producers as Uralkali and Canadian miner Potash Corp POT.TO. (Reporting by Dmitry Zhdannikov; Editing by Christian Wiessner)