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Russia's Uralkali sees potash industry consolidation: paper
August 5, 2013 / 5:28 AM / 4 years ago

Russia's Uralkali sees potash industry consolidation: paper

MOSCOW (Reuters) - Russian potash producer Uralkali URKAq.L (URKA.MM), which decided to break out of a trading venture with its Belarus partner Belaruskali last week, expects a consolidation of the industry as a result of price falls, the Russian firm’s CEO told Vedomosti newspaper in an interview published on Monday.

A view of waste heaps at the Belaruskali potash mine near the town of Soligorsk, some 130 kms (81 miles) south of Minsk, March 17, 2013. REUTERS/Vasily Fedosenko

Uralkali quit Belarusian Potash Company (BPC), one of the world’s two big potash companies, on July 30, and said it would now funnel sales through Swiss-based Uralkali Trading, heralding a price war for the key crop nutrient and pummeling the shares of companies that produce it.

Uralkali predicted that its break-up with BPC would cause the global potash price to fall by 25 percent to below $300 per ton in the second half of 2013. Analysts fear it could also halt global potash projects.

“Consolidation would be a logical step when the price falls to a level of marginal producers,” Chief Executive Vladislav Baumgertner told Vedomosti.

But he said it was too early to predict possible deals as the valuation of individual companies was now unclear.

Uralkali could discuss joining with Belarus in a Swiss-based trading company to export potash, but will not return to the Minsk-based venture, Baumgertner told Reuters last week.

Uralkali and its former partner Belaruskali had plans to create a Swiss-based Soyuzkali trading house instead of Minsk-based BPC about two years ago, but the company was never registered.

After Uralkali’s break-up with BPC any deals in the sector are unlikely in the foreseeable future but Uralkali shareholders might become interested in buying a stake in Belaruskali again, Sergey Filchenkov, an analyst at IFC Metropol, told the newspaper.

Belarus is under pressure to find a new strategy for its potash industry as there are fears the loss of the Russian partner could see the country lose key export revenues that in turn could lead to its currency weakening.

Reporting by Polina Devitt; Editing by Greg Mahlich

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