By Yuriy Humber and Maria Kolesnikova
Belarus said it's ready to welcome Russia's biggest potash producer, OAO Silvinit, into trading company Belarusian Potash Co., bolstering the trader's clout in the export market for the fertilizer ingredient.
"The door is open," a Belarusian official from the presidential administration said Sept. 3 by telephone from Minsk. Bringing Silvinit into Belarusian Potash, which already represents state-run Belaruskali and Russia's OAO Uralkali, would create "a player with immense strength" and give the market "stability," the official said, declining to be identified in line with state policy.
Belarus and Uralkali account for about 30 percent of world potash sales via Belarusian Potash, the top global trader with exports of as much as 12 million metric tons a year, according to its website. Belarusian Potash helped instigate a fivefold jump in global prices in 2007 to 2008, according to VTB Capital, while Silvinit's trader International Potash Co. led a decline in prices last year after agreeing to sell to India at $460 a ton, against rival bids of as much as $635.
A decision by Silvinit to trade via Belarusian Potash would combine about 44 percent of global sales of the crop nutrient, which helps plants to withstand dry soil. That would tighten the sellers' grip on the market after BHP Billiton Ltd. backed off from plans to sell the mineral by itself should it succeed in a takeover of Potash Corp. of Saskatchewan Inc.
BHP made a $40 billion bid for top global producer Potash Corp. last month. Together with the U.S.'s Mosaic Co. and Calgary-based Agrium Inc., Potash Corp. sells its output via trader Canpotex, which had 20 percent of the market last year, according to Uralkali and International Fertilizer Association data. The trader exports an annual 8 million to 9 million tons, according to its website.
Russian billionaire Suleiman Kerimov and partners acquired controlling stakes in Uralkali and Silvinit between June and August and are seeking to merge the two. Russia may allow the merger, while placing restrictions on what would be a national monopoly, the country's antitrust watchdog said on Aug. 26.
Coal-mine owner Anatoly Skurov and lawmaker Zelimkhan Mutsoev, who gained 44 percent of Silvinit in August, said they would continue selling via International Potash. In the same month, Silvinit sold its 32 percent stake in the trader, the Solikamsk-based company said in a statement on its website.
Change in Policy
"Silvinit's sale of its stake in International Potash might indicate a change in its marketing policy," Marina Alexeenkova, an analyst at Renaissance Capital in Moscow, said in a note to investors today. "We expect Silvinit to coordinate international distribution with Uralkali."
Belaruskali and Uralkali broke off ties with Silvinit and left International Potash to set up their own trader in 2005. Belarusian Potash is 50 percent-owned by Berezniki-based Uralkali, with Belaruskali holding 45 percent and Belarusian Railways the rest.
Belaruskali also has an accord with the Turkmenistan government to develop a deposit in the Central Asian nation that will require about $1 billion in investment. Turkmenistan currently doesn't mine potash.
Seven companies -- Uralkali, Potash Corp., Israel Chemicals, Mosaic, Silvinit, Belaruskali and K+S AG -- control 85 percent of worldwide potash production, according to a 2007 regulatory filing from Mosaic.
To contact the reporters on this story: Yuriy Humber in Moscow at firstname.lastname@example.org; Maria Kolesnikova in Moscow at email@example.com.