PhosAgro looked clear for victory in its long-running quest to strengthen its hold on Apatit - the phosphate ore producer at the centre of the imprisonment of former oligarch Mikahil Khodorkovsky - after lodging the highest bid for a 20% stake being sold by the government.

Moscow-based PhosAgro, a producer of phosphate and nitrogen nutrients, said that the 11.1bn-rouble ($345m) offer it had lodged for the Apatit stake in a second round of bidding, after the first auction collapsed in June, was "the highest price from any of the tender participants".

The company is believed to face only one rival suitor, Trust Bank, a Russian financial institution with close ties to PhosAgro.

Uralchem, the Russian potash producer which had shown a keen interest in the stake, failed to bid.

The government has up to 45 days to announce a winning bidder.

Tortuous path

Success by PhosAgro in the auction would end a difficult campaign by the group to win the stake in Apatit, in which it already controls 57.6%, and has gained consent from anti-trust authorities for full ownership.

Besides Uralchem, fertilizer group Akron expressed an interest in buying the stake and becoming a minority shareholder, an outcome that PhosAgro was keen to avoid.

In Russian metals producer Norilsk Nickel, the presence of minority shareholders has been a recipe for investor in-fighting.

Akron in July gave up its quest for the stake, after settling a dispute with PhosAgro over phosphate rock supplies.

Failed auction

Meanwhile, the first round of bidding for the Apatit stake collapsed in June after PhosAgro withdrew, blaming BNP Paribas, handling the auction, for setting unclear terms.

Trust Bank walked away too, leaving only Uralchem in the running, and rendering the auction invalid.

Russian privatisation rules, tightened after questions of corruption in early sales, stipulate a tender must be cancelled unless there is more than one bidder.

Khodorkovsky tie

Apatit - which has annual revenues of some $1.3bn, and produces raw materials including apatite concentrate, nephelynic concentrate, and ammophos - was central to Mr Khodorkovsky's imprisonment, after he and partners were suspected of acquiring illegally their stake in the group.

The state seized the Apatit holding as the Khodorkovsky empire was dismantled. PhosAgro, and a 50% stake in Apatit, were sold to managers.

PhosAgro depositary receipts, a proxy for shares, which are listed in London, closed 0.2% lower at $13.03.