Russia and Belarus continue to inch closer to resuming the joint venture that once accounted for 43% of the world's potash. The breakup of the Belorussian Potash Company (BPC) in July sparked a global potash panic. Each side had accused the other of exporting potash outside of the joint venture agreement, and it is assumed that both parties are correct.
Earlier this month, Uralkali reported a major shareholder shift as Uralchem -- the world's second largest ammonium nitrate producer -- purchased a 19.99% stake in Uralkali, prompting a number of individual investors to remove Uralkali from their portfolios. That puts Uralkali's current shareholder breakdown at 21% in the hands of Russian tycoon Mikhail Prokhorov, 19.99% in the hands of Uralchem and 12.5% to the Chinese.
Experts believe the exodus of smaller investors may have been part of the arrangement between Russia and Belarus to mend fences as Minsk had earlier targeted some specific Uralkali investors for arrest including Suliemon Kerimov, who has kept a very low profile since the trouble started.
Chief Executive Officer Vladislav Baumgertner, who was reelected as CEO while awaiting trial in Belarus, has since been ousted from his seat in favor of former Uralchem CEO Dmitry Osipov.
Uralkali CEO Osipov commented in a Uralkali release, "During the challenging conditions of the past few months, Uralkali's employees have demonstrated they are a highly efficient team. I believe that this should be credited to the management of the Company and, above all, to Vladislav Baumgertner, who has built remarkably reliable systems at Uralkali, and Viktor Belyakov, who led the Company since August.
My appointment to the position of the CEO of such company like Uralkali is a demonstration of a high level of trust by the Board of Directors. I would like to express my gratitude to the members of the Board of Directors and assure them that I will always work in the interests of the Company and its shareholders."
With a fresh stable of investors, newfound support from Uralchem and a brand new CEO, Uralkali has satisfied much of what Belarus was asking for in the way of concessions, opening the door to a renewed joint venture. This episode has been used to point out the difficulties that can arise when too few hold the reins of power, but in this case, the oligarchy is strengthened, if anything by the culling of shareholders and the introduction of large-scale investment from Uralchem.
The impact on pricing will depend on Chinese and Indian tenders, which are late this year. If Uralkali and Belaruskali are willing to give away the farm to secure Chinese marketshare away from Canada's Canpotex, prices here in North America will have to follow. But American growers are beginning to mutter about capitalizing on P&K already banked in the soil in the coming spring, reducing U.S. demand for potash. That plus uncertainty over the future of BPC will limit upside risk for potash near-term and could pressure spring prices even lower.