PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 18:58 UK, 2nd Dec 2013, by Agrimoney.com
Potash shares rise as Mazepin buys Uralkali stake

Shares in potash producers made ground after Dmitry Mazepin, a Belarus-born billionaire, purchased 20% of Uralkali, in a deal seen as boosting the potential for Belarus and Russia to renew a sales cartel.

Mr Mazepin, worth $3.2bn according to Forbes, bought the equity stake through his fertilizer group Uralchem in a deal worth some $2.9bn, working on Uralkali's share price on Friday.

The acquisition completes a change in the structure of leading shareholders in Uralkali, after Mikhail Prokhorov last month purchased a 22.2% stake owned by Russian oligarch Suleiman Kerimov.

Mr Mazepin bought his Uralkali shares in part from Anatoly Skurov and Filaret Galtchev, allies of Mr Kerimov.

Acron, the Russian fertilizer group which is investing in its own potash supplies, also revealed on Monday that it had sold a 1.1% stake in Uralkali for 5.5bn roubles ($170m), an average price of 170.1 roubles per share, leaving its holding at 1.8%.

"At this point, Acron Group is focused on implementing its investment programme, and to maintain a comfortable leverage the group decided to sell some of its Uralkali shares," its chairman, Alexander Popov, said.

Minsk-Moscow fallout

The end of Uralkali's Kerimov era was seen as boosting the chance of rapprochement between the Russian group and its Belarusian peer Belaruskali, whose falling out four months stunned the fertilizer sector, sending potash values tumbling, with the price declines spreading to other nutrients too.

The two groups had, through the Belarusian Potash Company joint venture, controlled more than 40% of world potash volumes, with price discipline in the market also engendered by the North American cartel Canpotex, leaving less than 30% of volumes outside the consortia.

However, Uralkali, claiming that Belaruskali had been selling outside the cartel, quit BPC in July, sparking a feud which led to the arrest of the Uralkali chief executive, Vladislav Baumgertner, by Belarusian authorities, who threatened to hold Mr Kerimov too if he came within their jurisdiction.

Mr Baumgertner was extradited to Russia two weeks ago.

Mr Mazepin, as a native of Minsk but who has sizeable Russian interests, who is said to have the ear of President Vladimir Putin, is seen by many observers as having the credentials to rebuild relations between the Russian and Belarusian fertilizer industries, and potentially restore price discipline in potash.

China factor

"Nothing is going to happen overnight. But you can see the potential for some kind of BPC-type deal emerging," one City investor in agribusiness groups told Agrimoney.com.

"One question mark is what say the Chinese will have."

China Investment Corporation, the Chinese sovereign wealth fund with some $575bn under management, in September took a 12.5% stake in Uralkali.

China, as the world's top potash importer, is seen as potentially working to block any new Belarus-Uralkali tie-up which might underpin values of the nutrient.

Market reaction

The impact on financial markets was to lift Uralkali shares by 2.5% to 169.09 roubles in Moscow.

Shares in many peers rose too, with German-based K+S - whose status as a relatively high cost potash producer has left it particularly vulnerable to the potash price downturn - adding 2.5% to E21.10 in Frankfurt.

In Toronto, Agrium shares stood 1.7% higher at Can$97.42 in afternoon deals.

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