blogs.ft.com/beyond-brics/2014/02/12/...-business-or-politics/
Uralkali and Belaruskali: driven by business or politics?
Feb 12, 2014 11:48am
When billionaire Suleiman Kerimov and his business partners sold their stakes in Uralkali,the Russian potash miner, at the end of 2013, analysts expected a prompt restoration of Uralkali’s export cartel with its former Belarusian partner, state-owned Belaruskali.
Yet both parties seem happy with things as they are. Any revival of the cartel looks more likely to be driven by political than commercial considerations.
Uralkali walked out of the Belarusian Potash Company (BPC) in July after accusing the Belarusian side of negotiating sales outside the cartel. Uralkali simultaneously abandoned its ‘price over volume’ strategy. As a result, global potash prices plummeted and Uralkali found itself in conflict with Belarusian authorities, who accused Uralkali’s management of plotting to damage the country’s potash industry.
At the height of the tension, Vladislav Baumgertner, then Uralkali’s chief executive, was arrested in Minsk. He was later extradited to Moscow, as Kerimov agreed to sell his Uralkali stake in a bid to smooth relations.
So far, however, no formal negotiations have taken place over restoring the cartel –although Oleg Petrov, Uralkali’s director for sales and marketing, told this month’s issue of Chem-Courier magazine that restoration of relations “would definitely be beneficial for Belarus, and, probably, for Uralkali.”
Petrov said that if BCP were revived, “neither jurisdiction nor personality would have to play a major role. The main thing is that the work of a single trader would be clear and understandable.”
Meanwhile, Bloomberg reported that the chief executives of the two companies met last month –apparently to discuss formalising their separation rather than to renew the cartel. Analysts said Uralkali, which previously had a 51 per cent share of sales volumes, would push for a larger proportion in any new arrangement as it has 13m tonnes of annual capacity, while Belarus has 10m tonnes. Bloomberg’s sources said Uralkali would only consider restoring ties if the partnership was registered outside Belarus.
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