Russian fertiliser major Uralkali will restore cooperation with Belarus Potash, Russia's ambassador to Belarus tells press

Mathew Kearney

December 31, 2013 (IntelliNews) – Russian fertiliser major and world's largest potash producer Uralkali is going to restore its cooperation with Belarus Potash Company (BPC), Russia's ambassador to Belarus Alexander Surikov told the press.

In the end of July Uralkali shook the potash market announcing seizing cooperation on export sales through the BPC (one of the two largest global potash traders with a 40% share), while aiming at much higher output volumes and lower prices. Following that, in the end of in the end of August company's CEO Baumgartner was detained in Belarus and accused of abusing office and plotting an unlawful scheme against its global competitors in the potash market, and the BPC in particular.

Russian authorities took a neutral stance on the conflict. Since then the shareholders of Urtalkali have changed, Baumgartner was extradited to Russia, and new CEO appointed. Relations between Russia and Belarus have also notably improved this month, with a USD 2bn loan granted by the president Vladimir Putin, additional assistance pledged by natural gas major Gazprom and state-controlled banks Sberbank and VEB.

Last month, Russian industrial and investment group Oneksim of tycoon and ex-presidential candidate Mikhail Prokhorov last month officially announced acquiring 21.75% of Uralkali controlled by another influential businessman Suleiman Kerimov. The replacement of Kerimov was demanded by Belarussian authorities that since July are in conflict with Uralkali over seizing cooperation on export sales through the BPC. This month another Russian fertilizer major UralChem acquired 20% in Uralkali. According to earlier reports also China Investment Corp sovereign fund acquired 12.5% in UralKali this fall.

This week Standard & Poor's affirmed the long-term corporate credit rating of BBB- and national scale rating of ruAAA of Uralkali, while taking the ratings off CreditWatch list and maintaining Negative outlook.

The affirmation is attributed to company's confirmed commitment to keep net debt to EBITDA below 2x and agency's view on string deleveraging capabilities. Company's credit metrics are expected to be kept within the rating category, despite a temporary rise in the net debt/EBITDA to 2.3x. At the same time Negative outlook reflects risks such as large shareholder distributions.

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