Uralkali plans capacity expansion but not to rejoining partnership

10 September 2013 23:13  [Source: ICIS news]

HOUSTON (ICIS)--Russia-based potash producer Uralkali said on Tuesday that it remains committed to its expansion plans and it does not expect to return to a marketing partnership with Belarus-based Belaruskali.

Tensions have escalated between Russia and Belarus since late July, when Uralkali informed Belaruskali that it was leaving the potash marketing partnership, Belarusian Potash Co (BPC). Uralkali had accused Belaruskali of selling independently and destroying the fundamentals of the trading agreement.

Later, BPC chairman and Uralkali CEO Vladislav Baumgertner was arrested in Minsk on allegations that he abused his authority as BPC chairman by allegedly making management decisions that favoured his company over the partnership.

In a conference call, Uralkali's acting CEO Viktor Belyakov said the company will move forward in spite of the recent events, which have roiled the potash market and future pricing. Belyakov said Uralkali plans on having an additional 1m tons of capacity by the end of 2014.

"Uralkali is well-positioned to maintain its market share in a competitive environment. We look to the medium-term future with confidence," said Belyakov.

Officials said it is expected that potash demand will continue to rise, with a potential for global consumption to reach as high as 54m tons this year and that this will eventually offset the current decline experienced with the dissolving of BPC.

Uralkali said it feels that currently many of the market participants are still on the sidelines as they watch to see where prices eventual settled.

Meanwhile, Belarus President Alexander Lukashenko said he expects Belaruskali and Uralkali to return to a working relationship because both sides stand to gain considerably more together than they would apart.

"Sooner or later, in order to restore the status quo, the Russians will come to us. At least we are not opposed to working together if there are big profits. They know what they need to do," said Lukashenko.

However, executives at Uralkali have been adamant about their disapproval over the detention of Baumgertner. Uralkali leadership and its board of directors have repeatedly said it considers all accusations against their CEO and other officials to be unfounded and politically motivated.

"The board of Uralkali has approved the new strategy, which does not provide for reunification," said Uralkali's Chairman Alexander Voloshin.

By: Mark Milam
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