Uralkali CEO replaced, as new investors make mark

Uralkali's new lead shareholders stamped their mark on the Russian fertilizer giant by replacing Vladislav Baumgertner, who presided over the controversial split with Belorussia, as boss in favour of one of their own candidates.

Uralkali revealed that Mr Baumgertner will on Tuesday step down in his second spell as Uralkali chief executive, which began in 2011, during which he has overseen the integration of Russian rival Silvinit, of which he also had a spell as chief executive, to create the world's biggest potash producer.

The announcement comes three days after billionaires Mikhail Prokhorov and Dmitry Mazepin completed purchases, through their respective empires, of a combined 47% of Uralkali.

Mr Baumgertner will be replaced by Dmitry Osipov, a former chief executive of Mr Mazepin's Uralchem fertilizer group.

'Deep industry knowledge'

Alexander Voloshin, the Uralkali chairman, said that was "confident" that Mr Osipov "brings deep industry knowledge and significant senior management expertise in the fertiliser sector".

Mr Osipov, also a former chief executive of Kirovo-Chepetsk Chemical Plant, "is well known as a senior manager with many years of experience working in the largest Russian chemical companies," Mr Voloshin said.

"The board looks forward to working with the new chief executive to implement the next phase of Uralkali's growth for the benefit of all its shareholders and customers."

Mr Voloshin highlighted that the change of chief executive was "taken in connection with the recent changes in the composition of the major shareholders of the company".

Reconciliation ahead

Mr Baumgertner's removal comes while he remains under house arrest in Moscow after being extradited last month from Belorussia, where he was held under suspicion of abusing his position as chairman of the Belarusian Potash Company, which Uralkali quit in July, prompting a slump in potash prices.

The break-up of the cartel, with Belorussia's Belaruskali, infuriated the Minsk government, which relies on potash for a large part of its finances.

Indeed, the appointment of a candidate more amenable to Minsk is seen as potentially smoothing the way to a reformation of a Belaruskali-Uralkali tie-up, potentially bringing more price discipline to the potash market and a rise in values.

'Comes under scrutiny'

Uralkali's new shareholders could bring a revision of the group's decision to ditch a disciplined pricing strategy operated with Belaruskali in favour of hiking output volumes, broker UralSib said.

"Having switched from a price-to-volume strategy, management is sticking to its strategy of maximizing volumes, thus seeking to leverage its low-cost-producer advantage over peers," the broker said, restating a "hold" rating on Uralkali's London-traded depositary receipts, a proxy for shares.

"However, we do not exclude that the volume-maximisation strategy comes under scrutiny given the change in Uralkali's shareholder structure."

The change in ownership has also included the taking by Chinese sovereign wealth fund CIC of a 12.5% stake.

China is the world's top potash importer.

Market reaction

Uralkali depositary receipts closed 0.5% higher at $26.93 in London.

Shares in other potash groups, many of which have struggled with lower potash prices, did better.

Shares in Canada's PotashCorp stood 2.2% higher at Can$34.50 in afternoon deals in Toronto, while shares in Germany's K+S rose 1.6% to E21.38 in Frankfurt, and in New York, Chile's SQM added 3.1% to $24.89.

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