Charges against former Uralkali CEO dropped, potash price war imminent
Criminal charges against the former chief executive of the world’s largest potash producer, Uralkali (LON:URALL), were dropped in Russia Friday, about 18 months after Vladislav Baumgertner blasted the global market wide open sending stock prices in the sector tumbling and projects back to the drawing board.
Baumgertner's breakup of the Belarus-Russia potash block – which cost him his job, charges and some jail time – was supposed to move potash from a clubby system of tightly controlled global supply and set prices to an open market where volume and cost-based pricing is key.
But as Belarus seeks to get a bigger piece of the $20 billion global market, experts are predicting a price war. According to Bloomberg, the Eastern European nation is running mines at almost full capacity to gain a grip of the U.S. and Chinese markets, at a time when Beijing is negotiating with other providers of the fertilizer ingredient:
“The real price war has already started,” Oleg Petropavlovskiy, an analyst at BCS Financial Group in Moscow told Bloomberg. “Belarus is offering lower prices in some regions, while running close to full capacity. It’s the key threat now for the global potash market and will not abate any time soon.”
Baumgertner was arrested in Belarus in August 2013 in a criminal case launched after a probe into an alleged abuse of power case, which led to serious damage to the public interests of country and the state-run producer, Belaruskali.
The charges followed a July decision by Uralkali to stop selling its output via the Belarusian Potash Company (BPC). Both Uralkali and Belaruskali previously sold its products via BPC, and both accused each other of also using other traders.
The case was turned over to Russia in September 2014. Belarus assessed the damages under the case at approximately $10 million.
While Baumgertner doesn't face any criminal charges any longer, Russian authorities said it doesn’t mean fresh damages claims cannot be filed against him in the near future.