Russia abandons plans to reintroduce potash export duty

05 August 2010 13:16  [Source: ICIS news]

MOSCOW (ICIS)--The Russian government has abandoned its plans to reintroduce an export duty on potash amid consolidation moves by potash producers in Russia and Belarus, according to market sources on Thursday.

Between March 2008 and April 2009, Russia’s potash exports were subject to a 5% customs duty, which was then rescinded as a result of last year’s downturn in global demand for potash.

Earlier this year, the Russian Finance Ministry indicated there were tentative plans to reintroduce the duty, effective from 1 January 2011, within the range of 5-15%.

The tax was designed to help keep domestic potash prices down as well as contribute to government revenues.

The decision not to reintroduce the potash export duty was made amid consolidation moves among potash producers in Russia and Belarus, according to market sources.

Uralkali’s controlling shareholder, Dmitry Rybolovlev, in June sold a 53.2% stake in the company to a consortium of Russian investors headed by property and oil tycoon Suleiman Kerimov, whose Kaliha Finance Ltd took a 25% share in Uralkali.

Subsequently, Kerimov pursued plans to acquire another leading Russian potash producer, Silvinit.

In Belarus, Uralkali has a 50% stake in the venture Belarus Potash Co, in which the Belarusian state-run producer Belaruskali owns 45%.

In June 2010, Belarus’s parliament voted to allow Belaruskali to be privatised, and Kerimov was said to be interested in acquiring it for $7.5bn (€5.7bn).

With additional reporting by Rita Menezes in London.

($1 = €0.76)

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By: Sergei Blagov
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