Belarus Potash Company (BPC), the exporting arm of state potash producer Belaruskali, says western sanctions on Belaruskali would lead to an increase in global potash prices and reduced availability of the crop nutrient.
Washington earlier this month blacklisted Belaruskali, one of Belarus’s largest state-owned enterprises and one of the world’s largest producers of potash, and imposed other punitive measures against Belarusian leader Alexander Lukashenko.
The U.S. sanctions do not include BPC, whose supplies account for 20 per cent of global potash trade. Belaruskali owns a 48 per cent stake in BPC and the rest belongs to other state firms.
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“The impact of the sanctions is difficult to assess at this point in time. But what is certain is that they will lead to higher potash prices and its lower availability on the global market,” BPC said.
“We are examining the decisions taken in detail. BPC will make every effort to fulfil its obligations to its partners within the current legal framework,” it added.
BPC ships potash mainly to China, India and Brazil and competes with Canada’s Nutrien and Mosaic among others.
“Although the U.S. makes up no more than 10 per cent of Belaruskali’s revenues, the cross sanctions threat might squeeze Belaruskali’s markets even more,” analysts at VTB Capital said in a note, referring to potential fears among firms that deal with Belaruskali that they could face U.S sanctions.
VTB Capital expects the U.S. sanctions to have limited impact on both of the firms for now, but add to nervousness on an already tight potash market.
A senior Indian industry official involved in import negotiations, who declined to be named, said they did not expect any impact in the short term.
“We have signed potash imports contracts earlier this year and those are unlikely to be affected by the sanctions,” the official said.
