Uralkali Doesn’t Pay Export Duties, CEO Baumgertner Says

OAO Uralkali (URKA), the world’s largest potash producer by output, doesn’t pay any export duties and doesn’t believe it should pay such tariffs, said Vladislav Baumgertner, the company’s chief executive officer.

The Russian mining industry is subject to “very competitive” taxation, he said at a conference in New York. “We feel very comfortable compared to our international partners.”

To contact the reporter on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net

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Uralkali Climbs for 2nd Day Before Increased MSCI Weighting

OAO Uralkali (URKA), the world’s largest potash producer by output, climbed for a second day before its weighting in MSCI’s Russia Index is increased at the close of trading today.

The shares added 3 percent to 264.70 rubles by the 6:45 p.m. close in Moscow after jumping 5.9 percent yesterday.

The decision to increase Uralkali’s weighting comes after the company acquired its competitor OAO Silvinit, MSCI Inc. said in a statement e-mailed on July 4.

“Uralkali will move from tenth to seventh-largest stock in the MSCI Russia Index,” Ovanes Oganisian, a strategist at Renaissance Capital, said in an e-mailed report today.

Uralkali to Buy Back Up to $1.06 Billion of Bonds on Aug. 22

OAO Uralkali (URKA)Russia’s largest fertilizer maker by market value, will buy back as much as 30 billion rubles ($1.06 billion) of bonds on Aug. 22, it said in a statement.

The company has sufficient cashflow to repay most of the bonds after potash prices surged this year, spokesman Alexey Sotskov said by telephone today. Uralkali sold two-year bonds with an 8.25 percent coupon in February to help fund the acquisition of a 20 percent stake in rival Silvinit.

Uralkali hedged its ruble bonds with currency swaps and now plans to benefit from terminating the arrangement, given the ruble’s appreciation against the dollar since February, the statement shows.

#Uralkali Ready to Cut #Potash Output to Protect 45% Price Gain: #Commodities

OAO Uralkali (URKA), Russia’s biggest fertilizer maker, is ready to cut production to prevent potash prices from falling after Potash Corp. of Saskatchewan Inc. announced reductions this year.

“Our strategy is that price is much more important than volumes,” Chief Financial Officer Victor Belyakov said in an interview yesterday in London. “It’s a strategy for most of the big players in the market. We usually cut some production to come up with a fair price.”

Russian producers and those in Canada, like Saskatoon, Saskatchewan-based Potash Corp., account for about 65 percent of global output, said Mark Connelly, a New York-based analyst at Credit Agricole Securities USA Inc. Suppliers are seeking to protect a 45 percent recovery in benchmark U.S. Midwest potash prices since July 2010.

“If the Canadian and Russian producers are aggressive in matching supply and demand, it shouldn’t matter very much what other producers do,” Connelly said in a telephone interview yesterday.

Potash, mined from deposits of salts laid down in ancient seas and captured in rock layers, helps plants to grow strong roots, resist disease and withstand drought conditions. Canada accounts for about 52 percent of estimated global reserves and Russia 21 percent, according to the U.S. Geological Survey.

Canpotex Ltd., owned by Potash Corp. (POT), Mosaic Co. and Agrium Inc. handles exports for North America’s largest suppliers. Potash Corp. is scheduled to report fourth-quarter earnings before the start of trading in New York tomorrow.

Click here to read more at Bloomberg

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Uralkali yields profit, promises half to shareholders

Russia’s leading global fertilizer producer, Uralkali has posted a 1H 2011 net profit of $794 million under IFRS including financial position and the results of operations of Silvinit Group acquired on May 17, 2011.

The bottom line compares with 1H 2010 net profit of $452 billion, with Adjusted EBITDA rising to $1.053 billion from $662 million year on year, on the back of revenue increase to $1.973 billion from $1.266 billion in 1H 2010.

Vladislav Baumgertner, Uralkali CEO, was upbeat about the results, saying that the company focus on production efficiency and growth of production capacity had resulted in overwhelming financial performance

“Uralkali’s operational and financial performance in H1 2011 has been very strong. The combined company continues to be among the most cost efficient potash producers in the world with an excellent pipeline of brown- and green-field development projects. The rising demand for potash allowed Uralkali to utilize its production capacities at almost 100%.” said Baumgertner.

The company mentioned that the merger of the two Russian potash producers, Uralkali and Silvinit, expected to bring a synergy effect resulting in growth of efficiency and production volumes

“The combination is expected to yield significant synergy potential including optimization of operational and transportation activities, lowering commercial and administrative expenses and complex development of the resource base for the organic growth of the company. The annual cost-saving synergy will amount to about $100 million starting from 2013. Uralkali production capacity now totals 11.5 million tonnes of potassium chloride per annum. Uralkali plans to further strengthen its position as a leading potash producer through its sustainable growth strategy, with further plans to reach 13 million tonnes of potassium chloride per annum,” the statement reads

Baumgertner added that the company approved new dividend policy regulations, relying on strong business sustainability and a forecast of reduced asset expenditure.

“We predict a significant growth of cash-flow in Uralkali in the next few years due to favorable market situation and our increasing production capacities. At the same time the long-term strategy of the company is one of the most efficient in the potash industry in terms of cost of new capacities. That is why it will not require significant financial investment. Taking this into account, the Board of Directors resolved to pay out the shareholders at least 50% of the net profit as dividends for maintaining the optimal capital structure,” Baumgertner said.

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Uralkali Borrows $1 Billion at Lower Rate to Refinance Debt

OAO Uralkali (URKA), the world’s largest producer of potash, agreed to borrow $1 billion for five years from banks led by UniCredit SpA (UCG) and ING Groep NV (INGA) to cut financing costs.

The loan, with a rate of 180 basis points over the London interbank offered rate, will go toward refinancing an earlier OAO Sberbank loan that Silvinit, now a unit of Uralkali, took to fund the development of the Polovodovsky potash deposit. The Sberbank loan was for 45 billion rubles ($1.5 billion) at 8.9 percent including bank fees, according to a company report.

“The interest rate is low as Uralkali probably started to negotiate it some time ago,” Mikhail Stiskin, a Moscow-based analyst at Troika Dialog, said by phone today. “The company has very strong balance, which helped.”

With the new loan, Uralkali lowered its average interest rate to about 3 percent, while decreasing currency risks, Chief Financial Officer Viktor Belyakov said in the statement.

Uralkali is using rising potash prices and benefits it expects from the Silvinit acquisition completed in June to cut borrowing costs for the combined company. In August, Uralkali’s trading arm increased potash prices for India by 32 percent from a year earlier to $490 a metric ton. Uralkali raised prices for China twice this year, in January and July. The China price is now $470 a ton, 34 percent higher than in the same period in 2010.

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Uralkali Refinances Debt

Uralkali agreed to borrow $1 billion for five years from banks led by UniCredit and ING Groep to cut financing costs.

The loan, with a rate of 180 basis points over the London interbank offered rate, will go toward refinancing an earlier Sberbank loan that Silvinit, now a unit of Uralkali, took to fund the development of the Polovodovsky potash deposit.

The Sberbank loan was for 45 billion rubles ($1.5 billion) at 8.9 percent including bank fees, according to a company report. With the new loan, Uralkali lowered its average interest rate to about 3 percent, while decreasing currency risks, chief financial officer Viktor Belyakov said in a statement.

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#India to Delay #Potash Import Deals on Sufficient Inventory

India, the world’s third-largest potash buyer, will delay signing new contracts to purchase the soil nutrient until July as inventories help meet farmers’ demand, according to the nation’s biggest importer.

Domestic potash stockpiles may total 2 million metric tons as of April 1, compared with 500,000 tons a year earlier, P.S. Gahlaut, managing director of Indian Potash Ltd., said in an interview in New Delhi today.

“We don’t need any imports in the first half as we will have sufficient opening stocks,” Gahlaut said. “With the government unlikely to increase subsidy, the use of potash may not see any growth.”

A decline in Indian imports may help cool a 39 percent rally in export prices (1567942) of potash from Canada in the past year and potentially lower earnings of Potash Corp. of Saskatchewan Inc., the largest fertilizer maker, and OAO Uralkali (URKA), Russia’s biggest fertilizer maker. Farmers can skip potash use for a year without hurting yields, Gahlaut said.

India’s potash consumption (CIFAINKT) may drop 30 percent to 4.5 million tons in the year ending March 31 on rising prices, Gahlaut said. Prices in India have surged to 11,300 rupees ($214) per ton from 5,055 rupees in March, according to data from the Fertiliser Association of India .

“If there is further price increase by suppliers and rupee weakens, consumption will continue to fall as it becomes unaffordable,” Gahlaut said.

Potash sales dropped 58 percent to 975,200 tons in the seven months ended Oct. 31 from 2.3 million tons a year earlier, according to the fertiliser association. Sales of di-ammonium phosphate and mono ammonium phosphate declined 21 percent to 6.14 million tons during the seven-month period, the data showed.

To contact the reporters on this story: Pratik Parija in New Delhi at pparija@bloomberg.net; Prabhudatta Mishra in New Delhi at pmishra8@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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Uralkali CEO Says No #Potash Price Reduction for #India, #Vietnam

OAO Uralkali, Russia’s largest fertilizer maker by market value, has no plans to cut potash prices for India after importers in the Asian country asked for a discount as the rupee slumped against the dollar.

“There won’t be a price revision,” Chief Executive Officer Vladislav Baumgertner said in a telephone interview. “We cannot offer discounts for individual markets while global demand is high and our plants are working at full capacity.”

India’s rupee fell to a record 52.73 per dollar during trading on Nov. 22 on concern Europe’s debt crisis will hurt demand for emerging market assets, prompting fertilizer importers to ask suppliers to lower prices.

Uralkali (URKA) has no plans to cut potash prices for Vietnam either, Baumgertner said. The company’s trader Belarusian Potash Co. agreed to sell about 275,000 tons of potash to Vietnam next year for about $140 million, Belta reported today.

It’s a “misinterpretation” to assume those numbers indicate a reduced price of $509 a ton, Baumgertner said.

“BPC signed a framework agreement, stating indicative sales volumes only,” Baumgertner said. “The price for Vietnam remains linked to the Southeast Asian spot price, which is now $535 a ton.”

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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Research and Markets: Global and China Potassium Reserves and Potash Fertilizer Industry Report, 2010-2011

Presently, the proved reserves of potassium in the world hit about 10 billion tons, but the distribution shows serious imbalance. Canada, Russia, Belarus and Brazil occupy more than 90% of the global potassium reserves, while China has only 2.2%.

#Uralkali Sees No Drop in #Potash Price as Users Can Afford to Pay

OAO Uralkali (URKA), Russia’s biggest fertilizer maker, forecasts that potash prices will remain as high as last year as buyers of the crop nutrient can afford to pay after increased earnings from agricultural products.

“Soft-commodity prices are at very healthy levels,” Chief Financial Officer Victor Belyakov said in an interview in London today. “Farmers earn very good margins, they can actually afford to pay even more.” Corn, a leading potash-consuming crop, is trading 27 percent above its five-year average in Chicago after record demand eroded inventories.

Uralkali, which had record production of 10.8 million metric tons last year, projects global demand for fertilizers at similar levels to last year’s 58 million tons, Belyakov said. “We think that 2012 won’t be worse than 2011.”

Potash imports by China, the largest user of the crop nutrient, may decline in 2012 for the first time in three years amid falling demand and high stockpiles, Gavin Ju, a consultant at researcher CRU International Ltd, said on Jan. 13. Macquarie Group analysts see global demand picking up in the second quarter, according to a Jan. 18 report.

Berezniki, Russia-based Uralkali (URKA) plans to cut as many as 1,000 jobs this year after eliminating more than that figure in 2011 as part of a plan to achieve about $100 million in annual cost savings, Belyakov said. The company also plans to increase the cost-saving target “significantly” in coming months, he said. Uralkali is chiefly reducing administrative staff, which doubled after its merger with OAO Silvinit last May, he said.

The company, which has about $2.4 billion of net debt, may arrange bank loans to limit its capital costs, Belyakov said. Uralkali intends to restrict the ratio of net debt to earnings before interest, tax, depreciation and amortization to no more than 1.5, he said. The current ratio is 1, given the company’s consensus analyst Ebitda estimate of $2.4 billion for 2011, he said.

Uralkali plans to invest about $700 million this year, Belyakov said. It will spend $250 million on maintenance and the rest on expansion, he said.

To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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Farmers & Investors Eye Uralkali Developments Closely

By Jonathan Mohan

Reports have been surfacing that Russia’s Uralkali is going to restore its partnership with Belarus’s Belaruskali and market potash via the Belarusian Potash Company (BPC). The reason for this is, the Russian ambassador to Belarus Alexander Surikov, has told a news conference on Friday that Uralkali is ready to restore cooperation with Belaruskali.

After Uralkali’s bombshell that they are going ‘solo’ in July much has taken place in the potash market and a future partnership reforming may be bad news for farmers. In the past six months, North America’s potash marketing arm Canpotex has been very worried as some of its members saw a drop in share prices as much as 25%. Saskatchewan based PotashCorp has reduced its workforce by 18% and cut back mine production.

Let’s look into what took place on the other side of the world. Uralkali’s CEO Vladislav Baumgertner was arrested in Minsk and then extradited to Russia. Russian tycoon Suleiman Kerimov sold his 18% share in Uralkali to Russian billionaire Mikhail Prokhorov’s investment arm ONEXIM. Belarus’s President Alexander Lukashenko has sent negative signals to the Russian government and diplomacy beyond measure has been displayed from the Kremlin. Uralchem, the world’s second largest ammonium nitrate producer has become a shareholder.

 If Uralkali and Belaruskali reunite, the control of 40% of the world’s potash market will be in their hands and Canpotex in the west will have just below that resuming the global potash oligopoly. There will surely be a period of more volatility before prices rise but it depends on what prices contracts are agreed upon especially in China and India. Farmers would tend to buy fertilizer and stockpile before the rise begins. The manipulation of potash prices by such cartels is very probable in the future if the situation continues as present. The only light at the end of the tunnel for farmers are years’ ahead providing BHP Billiton quickly completes with the Jansen project and off-sets the price-over-volume paradigm.  

For a detailed analysis on the initial split of the BPC, please see my related article, click here.  


Hitler finds out Uralkalis’ CEO is locked up in Belarus. Russia’s potash company Uralkali, CEO Vladislav Baumgertner is locked up in a Belarusian jail after breaking a trading arm partnership with Belaruskali. Belarus president Alexander Lukashenko has him in a Soviet Era jail in Minsk. Russian President Vladimir Putin has not made and harsh moves to get Vladislav free but is very diplomatic. Russian business tycoon Suleyman Kerimov is now selling his $3.7 billion stake in Uralkali. Canpotex comprising of PotashCorp, Mosaic and Agrium in the west know for worldwide potash price manipulation is not happy with Uralkali move as their share price has tumbled.

Protests in Switzerland against Soyuzkali registration

Members of the Swiss parliament try to figure out if it is possible to prevent the appearance of Lukashenka’s company in the country.

The media report about plans of the Belarusian authorities to register Soyuzkali firm in the Canton of Zug. It will be a joint Belarusian-Russian venture with Belaruskali and Uralkali companies owning 50% of shares each.

Under the laws of the Canton of Zug, the details will be kept in secret until the end of the official registration process, Radio Svaboda reports.

According to  Нandelszeitung, due to the joint ownership and Swiss registration address,  Alyaksandr Lukashenka will be able to avoid sanctions and make profit without obstacles by selling Belarus’s main resource – potash fertilizers. Besides, the new company, which will be controlled by Minsk, will have more possibilities to receive loans due to its residence in Switzerland. The Swiss registration address will also give a more favourable tax regime.

The Swiss government declines to give comments to journalists. Meanwhile, members of the Swiss People’s Party and the Green Party insist that members of the Zug government should find out if it is possible to prevent the appearance of Lukashenka’s firm in Switzerland. If there are no such possibilities, legislation should be changed, they think.

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