POTASH: China Threatens Russian Bid for Potash Dominance as Lukashenko Seeks Cash


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China may thwart Russian efforts to control almost half the potash market as Belarusian President Aleksandr Lukashenko seeks to sell part of fertilizer producer Belaruskali to stave off a deepening economic crisis, according to a Bloomberg file.

Bloomberg noted OAO Uralkali expressed interest last month in buying a stake in Belaruskali in a deal that would give the Russian company 45% of global potash production as food shortages boost demand for the potassium compound. Lukashenko, who values Belaruskali at Us$30 billion, may opt to sell a smaller holding to a Chinese company, Lilit Gevorgyan of IHS Global Insight is cited as saying.

"The Russians realize that Lukashenko is short of cash and this is a fantastic opportunity," Gevorgyan, a London-based analyst who focuses on the former Soviet Union, reportedly said. "But he's realizing that he's finding himself increasingly in Moscow's pocket, so if he could negotiate a deal and convince the Chinese to take a stake, it would be much better for him."

The potential fight for Belaruskali, which produces 15% of the world's potash, pits Russia's drive to boost its influence in the former Soviet Union against China's strategy of investing to secure the raw materials it needs for a burgeoning economy, Bloomberg said. Chinese bidders may include Sinofert Holdings Ltd. and China BlueChemical Ltd., according to analysts.

Belarus is the world's third-biggest producer of potash, behind Canada and Russia, with China and Germany tied for fourth, according to the U.S. Geological Survey. The five countries accounted for 83% of production last year, Bloomberg said.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Commodities


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