OREANDA-NEWS. August 27, 2010. The sale of a shareholding in Belaruskali, one of the largest producers of potassium chloride in the world, to a large potash consumer could result in lower potash prices globally, a potash market expert told.

“If, say, China bought a stake in Belaruskali, Belarusian Potash Company [responsible for sale of Belarusian potash –] might have to sell certain amounts at fixed prices – market or below market – to the consumer that holds that stake,” the expert said.

According to the expert, “if Belarus initially manages to contribute some money to the economy through a sale of a stake in Belaruskali, the positive effect could be neutralized later by drops in potash prices.”

This could have a direct and indirect effect on potash prices, he believes. “If we want potash prices to keep growing, we should not consider selling a stake to a large consumer now,” he said.

Asked whether Russian Uralkali and Silvinit were interested in acquiring Belaruskali, he said investors were always keeping an eye on the potash sector.

Commenting on the recent developments on the Russian market, the expert said a merger of Uralkali and Silvinit was not out of the question. “If this happens, Belarusian Potash Company will also deal with Silvinit sales, and the share of the company on the world market will reach 40%,” he said. Earlier, the new owners of Uralkali confirmed that potash trading via Belarusian Potash Company would continue.

Belarusian Potash Company controls 32% of the potash trading market.

The expert believes it is premature to speak about hikes in potash prices on the world market, however, prices would be growing gradually, he said.

“There are many factors shaping the price: farm produce prices, railway rates, freight tariffs. The recent news about BHP’s plans to acquire Potash Corp. of Saskatchewan Inc. – the leading maker of mineral fertilizers, increases in produce prices and ban on Russian grain exports could also contribute to the positive pricing trends,” the expert said reiterating that the potash market was attractive for investors.

He noted that the potash market would benefit from the fact that the acquisition campaigns and changes in the structure of shareholders had been completed before active negotiations with the major consumers of potash fertilizers started.

“We still have some time before the active phase. There is time for buyers to analyze the situation and make conclusions. If this process [change in the shareholding structure of Silvinit] were completed later, talks with consumers could be longer and harder.”

Earlier, the Belarusian government included Belaruskali in the 2008-2010 privatization plan.