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MOSCOW — Reuters – Tycoon Mikhail Prokhorov has agreed to buy a stake in Uralkali, the world’s largest potash miner, as Russia seeks to ease tensions over the collapse of a potash sales cartel with Belarus that drove down global prices.
The deal was blessed by President Vladimir Putin, sources familiar with the matter said, in a bid to repair ties with Belarus President Alexander Lukashenko. Russia’s ally had arrested Uralkali’s boss after the Russian firm quit the marketing pact.
Prokhorov’s investment firm, Onexim, said on Monday that it expected to quickly complete the purchase of Suleiman Kerimov’s 21.75 per cent stake in Uralkali. Talks continued on the sale of stakes held by Kerimov’s partners to other buyers in side deals, which linked together would secure Prokhorov and his allies strategic control over the business.
Lukashenko, riled by the Uralkali gambit that which hit a major export earner for Belarus, has demanded that Kerimov sell out as a precondition for freeing Uralkali chief executive officer Vladislav Baumgertner from house arrest in Minsk.
Uralkali shares gained 3 per cent but were still down 4 per cent from levels in July, when it quit the Belarusian Potash Co. (BPC) joint venture, which controlled two-fifths of the $20-billion (U.S.) world market.
“If this helps to stabilize the market and to reach global peace, we would be glad,” said BPC representative Irina Savchenko. She declined to comment on the possible re-creation of the joint trading venture with Russia.
Uralkali’s dash for market share triggered a 20 per cent drop in prices of potash, a fertilizer ingredient, leading farmers to hold off on purchases in anticipation of further falls.
Analysts doubt that the cartel can quickly be restored in an industry plagued by overcapacity.
“A shift to a joint distribution is not as likely as many market participants believe,” Merrill Lynch analyst Eduard Faritov said in a note, adding that Prokhorov would be reluctant to cede sales volumes to Belarus.
Prokhorov, a long-time former business partner of Kerimov, has launched a political career in Russia. He ran against Putin in last year’s presidential election, placing second, and remains a leading figure in the Russian business establishment.
“The purchase of the stake in Uralkali is a long-term investment in a company that is unique from the standpoint of its position in its industry and its role in the world economy,” Onexim CEO Dmitry Razumov said in a statement.
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