Teddy Bears May Divert Potash to China

October 10, 2012 06:33 AM
 

The European Union is considering trade sanctions against Belarus for purported human rights violations in that nation and the ensuing political tensions have China eyeing a potash bargain. Canadian potash producer Canpotex had expected to ink a deal with China sometime in August or September, but word has been sent that the price is higher than China wants to pay and the number-one importer in the world will hold out.

China garners 16% of the World's potash supply followed by the U.S., Brazil and India. That is a big enough share to slow production in Saskatchewan and affect Mosaic's earnings.

Meanwhile, Belorussian President Aleksandr Lukashenko is reportedly still fuming from the July 4th teddy bear drop. A human rights activist group from Sweden flew into Belorussian airspace and dropped over 800 teddy bears adorned with pro-democracy signs. In response, President Lukashenko fired his head of the border service and the head of the air force -- both generals.

Officials fired over teddy bear drop

(Photo by UPI)

Amnesty International reports that since his election in 1994, President Lukashenko has built an authoritarian regime in which citizens are barred from assembly and free speech, and political "disappearances" and arbitrary imprisonment await any political dissenters (Click here for the AI report).

Political pressure on the Lukashenko regime from the E.U. will undoubtedly improve relations between potash rich Belarus and China and that same sentiment should spill over into India, which has also decided to wait on booking this fall's Canadian potash. As tensions rise, Belarus has the resources to fill China's potash order by rail giving Belarus an end run opportunity on E.U. trade sanctions which could end up in a huge payoff for Lukashenko in export relations with China.


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