India shows interest in Belaruskaliy
Besides, Indian Potash Ltd is interested in a long-term agreement on the supply of potassium chloride from Belarus. On August 27, 2011 the Indian Governments and Belarus signed a protocol concerning the examination of the possibility to conclude a long-term contract for buying potassium and India’s equity position in Belaruskaliy (this concerns a minority interest).
In aletter from the Indian Minister, it is stated that “within the implementation of the protocol the IPL takes on long-term responsibilities to buy Belarusian potassium and the IFFCO will be involved in the conduct of due diligence in relation to the possibility of purchasing a share of Belaruskaliy”.
The IPL company that supplies more than 60% of the Indian potassium market is a strategic partner of the BPC (Belarusian Potassium Company), an exclusive Belaruskaliy and Uralkaliy production exporter. India covers its demand in potassium fertilizers fully due to import, purchasing about 5 mln. tons of fertilizers annually. That is why the Ministry urges market players to buy potassium assets and create joint ventures with fertilizer producers abroad.
In our opinion, the probability that Belaruskaliy shares will be sold to residents of India seems low, as a minority interest will not allow them to influence the pricing and merchandising policies of the Belarusian enterprise. However, it should be admitted that the financial capabilities of the Indian Government are now substantial (by April 27, 2012 the Indian gold and foreign currency reserves reached USD295.361 bln.).
For reference. According to Belstat the production of potassium fertilizers in Belarus in the first quarter of 2012 decreased by 12.1% to 1.269 mln. tons compared with the first quarter of 2011. This was caused by the decreased demand for potassium fertilizers on foreign markets.
Thus in January-February 2012, Belarus abridged the export of potassium fertilizers compared with the same period of the previous year twofold to 377.2 thousand tons. In monetary terms in January-February of the current year the export supplies of potassium fertilizers dropped by 40% to USD285.581 mln. the average potassium fertilizers price grew in January-February 2012 compared with January-February 2011 by 22.1% to USD757.1 per one ton.
JSC Belaruskaliy is one of the world’s largest producers of potassium mineral fertilizers. All 100% of shares belong to the Government. The enterprise functions on the basis of the Starobin potassium salts deposit and comprises four mining departments, auxiliary shops and service subdivisions. It employs 18.589 thousand people. The share of the enterprise in world export exceeds 16%. The production is supplied to more than 50 countries. Belarusian Potassium Company deals with all exports.
Belarusian Potassium Company is an exclusive supplier of potassium fertilizers produced by JSC Belaruskaliy (Soligorsk) and JSC Uralkaliy (Perm region, Russia) to foreign markets. The BPC was established in 2005. Shareholders of the company are Belaruskaliy (45%), Belarusian Railway (5%) and Uralkaliy (50%). The BPC is the largest supplier of potassium fertilizers on the world market the company’s share makes up 42% of the world market volume.
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.