Kommersant: No cooperation between BPC and Uralkali

The Belarusian and Russian companies are not going to work together in a previous form.

The heads of Uralkali and the OAO Belarusian Potash Company (BPC, Belaruskali's trader) had the first personal meeting for the last 6 months. The sides didn't discuss resuming the cooperation, according to Kommersant's sources. On the contrary, they spoke about Uralkali's possible exit from inactive ZAO BPC that had been a joint trader until August 2013. The companies have no intentions to work on old arrangements in spite of the change in Uralkali's shareholders and the calming conflict.

Dmitry Osipov, the CEO of Uralkali owned by Onexim Group and Uralchem, held a meeting with OAO Belarusian Potash Company (BPC) Alena Kudravets (Elena Kudriavets) on January 31. It was the first meeting on such a level after Uralkali and Belaruskali stopped joint sales through joint venture ZAO Belarusian Potash Company (ZAO BPC) in late July 2013. The split led to a political conflict with the active participation of Lukashenka, who demanded criminal prosecution of Uralkali''s managers and owners. The latest attempt to hold negotiations with the Belarusian side made by the Russian company's CEO in August 2013 ended in his arrest. The meeting between Dmitry Osipov and Alena Kudravets took place in Moscow.

According to sources close to the talks, the sides discussed variants of Uralkali's exit from ZAO BPC, where it owns a 50% stake. However, no decisions were made. OAO BPC's spokesperson Iryna Sauchanka (Irina Savchenko) confirmed that “the current issues of cooperation relating to Uralkali's stake in ZAO BPC were discussed”. Uralkali's representatives decline to comment on the situation. Besides Uralkali, ZAO BPC's shareholders are Belaruskali (45%) and Belarusian Railway (5%). The joint venture accounted for 43% of the global potash market until the middle of 2013. Uralkali announced its decision in late July to trade independently. Uralkali now directs sales through its own trading company, Uralkali Trading. Belaruskali trades through its own OAO BPC set up in October 2013.

Sources claim Uralkali and Belaruskali are not going to cooperate in ZAO BPC. “If the companies decide to work together again, it will require a new trader and new shareholding proportions,” a source notes. The sides used to sell products on a parity basis despite a difference in production volumes (Uralkali's 10.5 million tonnes and Belaruskali's 5.7 million tonnes).

Raiffeisenbank's Konstantin Yuminov notes Uralkali and Belaruskali don't have to set up a joint venture in the old form if the companies agree to restore cooperation. “They can use a simpler cooperation scheme, partially joint trading,” the expert says adding that Uralkali's new owners, Onexim and Uralchem, will try to gain as much as possible from the resumed cooperation, because there's the political will for restoring ties, but no strict requirements from the states.

Photo: Bloomberg