OREANDA-NEWS. Potash producer Silvinit reported on Friday that it was to suspend product shipping due to a sinkhole that occurred as a result of last year's mine flooding at Uralkali, which threatens Silvinit's only railway, Aton Capital think tank informs with reference to Silvinit. The company expects the railway to collapse within a month and a half. Russian Railways says a bypass would be constructed only by February 2008.

The railway collapse is likely to hurt Silvinit (stopping production and shipping for approximately two months), but works in favor of other potash producers, as the reduction in global supply is likely to drive prices up, and even a sharp increase in potash costs would be unlikely to significantly impact domestic fertilizer producers' earnings, which are expected to be at record levels for 2007F. Potassium chloride currently is roughly 10% of the cost of goods manufactured by diversified fertilizer producers.