After a very public discourse over the breakup of FSU potash joint venture, Belorussian Potash Company (BPC), detained Uralkali CEO Vladislav Baumgertner is now back on Russian soil. The extradition was settled on Wednesday this week with Baumgertner now in a low-level white collar Russian prison.
Belarus has demanded Baumgertner pay restitution for losses related to unfair dealings with then partner, Belaruskali. It is unclear whether Baumgertner will have to pay the $100 million in damages himself, or if another arrangement can be made. The news comes as Sulieman Kerimov sells his stake in Uralkali to Russian billionaire Mikhail Prokhorov. That move fell in line with Belarus' wishes who had targeted Kerimov, and is among the conditions that would allow BPC to resume the joint venture.
Officials are already talking about potash prices recovering in the coming months, but details are few about the future of the joint venture. By the numbers, Belaruskali needs it worse than does Uralkali, but each respective nation relies on potash sendouts for a substantial portion of national revenues. Belaruskali is better off working in conjunction with Uralkali under the BPC flag, but Uralkali's position is much stronger including the recent purchase of a 12.5% stake in Uralkali by a Chinese firm that solidified Uralkali's relationship with one of the world's largest importers of potash.
The sale of Kerimov's stake and the release of Baumgertner to Russian custody are concessions toward ending the dispute, but each believes the other 'stepped-out' on the joint venture and serviced contracts to to outside buyers, violating the joint venture agreement. Both companies are still stinging from perceived improprieties while under the joint venture, and those wounds may be difficult to heal.
With Belarus' demands that Kerimov exit Uralkali met, and Russia's demands of a returned Baumgertner now satisfied, the possibility of a reunited BPC is strengthened. However, the wounds that led to the breakup are still on the minds of high level players. It will be pride versus revenue as both Uralkali and Belaruskali determine if they can reconcile their differences, and if a renewed joint venture would benefit them both. Officials both in the FSU and in Canada have high hopes that potash can get back to business as usual, but that will likely mean higher prices by spring.
If FSU prices recover from the 30% pricing falloff as a result of the BPC split, the door will open wide for Canadian potash producers to recover price strength as well.