OREANDA-NEWS. March 11, 2010. Acron has reported that the Moscow Arbitration Court has honored a lawsuit from Dorogobuzh (of Acron Group) and obliged Silvinit to conclude an agreement with Dorogobuzh on the terms of a draft agreement presented by the consumer. The draft agreement contains a pricing formula that envisages annual adjustments in potash prices in line with Russia’s PPI for the previous year. The price for 2010 was set based on the 2009 price multiplied by Russia’s PPI index for 2009. The annual volume of potash delivered is 150,000 tons.

According to the information received from Acron, another, similar lawsuit against Silvinit is now in court, but for technical reasons, the lawsuit lodged by Dorogobuzh was to be heard first.

On the face of it, the news is very positive for independent compound fertilizer producers, which are sensitive to raw material prices. This primarily holds true for companies that have no in-house resource bases, namely, Acron, Dorogobuzh and UralChem. However, we are not inclined yet to overestimate the significance of this news.

This is just a first court ruling and it has not been ruled out that Silvinit will appeal against it in higher courts, in which case litigation could drag out for a year or more. Until a court of last resort hands down its verdict, Silvinit has the right not to conclude the contract on the terms upheld by the first instance court.