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China Acquires 12.5% Uralkali Stake

September 24, 2013
By: Davis Michaelsen, Pro Farmer Inputs Monitor Editor

As Uralkali CEO Baumgertner languishes in prison in Belarus, reports from Moscow have surfaced that China has bought into Uralkali without any cash exchanging hands. Former partner turned competitor Belaruskali has made an export agreement with Qatar's Muntajat, but with China seeing stock prices fall in Uralkali, they decided to jump in, suggesting the price slide for potash may grind to a halt soon.

Industry experts have hinted Uralkali and Belaruskali may mend fences and restart the joint venture, but with each move toward outside involvement, the two draw further apart, and a reconciliation seems less and less likely.

According to reports, China Investment Corp. acquired the 12.5% stake in a bond exchange with Wadge Holdings Limited. Sources say the transaction was inspired by Uralkali's market value falloff to $20 billion. Uralkali shares rallied 1.1% on the news.

The move is expected to lead to extensive tenders of Russian potash to China, BPC's former best customer. China has been able to oversupply the global urea market with increases to production capacity in the works. This fits nicely with Uralkali's vow to put volume over price to garner marketshare.

The future looks brighter than Baumgertner's detention would imply and as Uralkali finds a market in China for potash, Belaruskali will have a hard time keeping up. China has wielded a strong arm over global potash pricing, and bought into Uralkali when the stock was within it's go-zone. If Uralkali really wants to oversupply the global potash market, they can have no better mentor than China.


 

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