海角大神

听Russia's Uralkali quit one of the world's two big听potashcartels on Tuesday, heralding a price war for the key crop nutrient and pummelling the shares of companies that produce it.

The break-up of the Belarusian听Potash听Company (BPC), a joint venture with Belarussian partner听Belaruskali, leaves North America's听Canpotex听as the dominantpotash听export venture.

It could lead to cancellations of projects by rivals as the industry weighs the effect of lower prices, but may bring better deals for farmers.

"It is as if听Saudi Arabia听decided to leave OPEC - oil prices would fall immediately," saidDmitry Ryzhkov, equity sales trader at Renaissance Capital.听

In negotiations with big buyers like听India听and听China, BPC and听Canpotex听usually settled for deals at similar prices, and they had no qualms about turning off the supply spigot when the buyers looked likely to gain the upper hand. Together the two accounted for almost 70 percent of global听potash听sales.

That clubby system is now under threat after a falling out between BPC's members. Uralkali promised to bolster production and sales, even as听potash听prices are already in decline.

U.S.-listed shares of the听Canpotex听owners -听Potash听Corp of听Saskatchewan,听Mosaic Coand听Agrium听Inc - plummeted, cutting their market value by nearly $12 billion by early afternoon.

In the last few years, BPC and听Canpotex听raised听potash听prices well above their production cost, a senior official at a major Indian听potash听firm said, asking not to be identified because of the sensitivity of the matter.

"It hurt Indian companies, Indian farmers and the Indian government," the official said. "The break-up will limit their power ... Certainly this will bring down听potash听prices."

Uralkali is pulling out of the venture after reaching "deadlock" over sales and will export听potash听via its Swiss-based听Uralkali Trading, chief executive Vladislav Baumgertner said.

"In the near future we expect (global) competition to become stronger - that will push prices down," Baumgertner said.

The decision to quit BPC may cut the global听potash听price to below $300 per tonne in the second half of 2013, from the current $400, Uralkali said. Lower fertilizer prices could mean rising demand from price-sensitive farmers in听Asia.

Shares of Uralkali, part-owned by tycoon听Suleiman Kerimov, plunged 19 percent, prompting the听Moscow听bourse to suspend trading in the stock.

Shares of听Germany's K+S, a rival fertilizer firm, sank by 24 percent to a six-year low.

Potash听Corp shares fell 19 percent, while Mosaic and听Agrium听lost 18 and 5 percent respectively.听Agrium's fall was less steep as it is more focused on nitrogen production than听potash.

Farmers would be big winners from a drop in听potash听prices, although grain prices are also key to their profits, said听Charles Neivert, analyst at Cowen Securities.

"You've got the Brazilian season coming up and (farmers) are licking their chops on this one."

Uralkali will now look to boost sales to retain its dividend policy. It plans to boostpotash听sales to 13 million tonnes in 2014 and 14 million tonnes in 2015 from 10.5 million tonnes this year by expanding market share in听China,听India听and听Brazil.

It plans to export more than 2.5 million tonnes to听China听this year, up from 2 million in 2012.

However, it will be harder to win business in听India听as companies there have already signed import deals for 4 million tonnes, said a senior official at state-run听Rashtriya Chemicals听and Fertilizers Ltd, declining to be named.

A new emphasis on volume by Uralkali may force听Canpotex听to consider the same strategy, instead of carefully matching production levels to demand.

The second-biggest听Canpotex听producer, Mosaic, said on Tuesday that it's too soon to change course, and it doesn't see听Canpotex听crumbling.

"It seems there's a feud underway between Uralkali and听Belaruskali听and the rest of the industry's caught up," said Mosaic Chief Financial Officer Larry Stranghoener. "We're still trying to sort out what Uralkali intends to do, which may be different from what it says it will do."

NEW PROJECTS

The price fall could cause new听potash听projects to be delayed or cancelled, Raffeisenbank analyst听Konstantin Yuminov听said.

Miner BHP Billiton plans the world's largest听potash听mine in听Western Canada, with a 2017 opening date for the $14 billion听Jansen mine.

BHP is expected to take a decision on the Jansen project this fiscal year. Rival industry executives have questioned the project's profitability at current price levels.

BHP declined to comment on the impact of Uralkali's move.

Uralkali said it would delay its听Polovodovsky mine, which would cost an estimated $2.4 billion to build and increase its capacity by 2.5 million tonnes. Other projects cancelled or delayed include the $6 billion Rio Colorado听potash听project in听Argentina, which Brazilian miner Vale quit this year.

VOLATILITY

The BPC news came days after Uralkali said shareholder听Alexander Nesis听had sold his 5 percent stake. Uralkali said it would freeze its buyback programme due to likely volatility in its stock.

Uralkali, with costs of around $60 per tonne, said global prices were likely to be kept above $200 per tonne, supported by European and North American operators that have higher costs.

Potash听is the main export product for听Belarus,听Russia's staunchest ally among the former Soviet republics whose economy is stagnating after a financial crisis in 2011.

Belaruskali听was a partner to Uralkali for eight years in BPC, which once held 43 percent of the global听potash听export market. Uralkali was at one point rumoured to be interested in buying a stake in听Belaruskali听- which now looks unlikely.

Their joint venture started to crumble this year as rumours emerged that both were selling听potash听outside the partnership. The two firms previously denied those rumours.

Uralkali said it pulled out because听Belaruskali听had made key fertilizer ingredient deliveries outside the partnership.

The decision came as a surprise for听Belaruskali, said a top manager who asked not to be identified. According to Uralkali's CEO, the company had informed听Belaruskaliverbally on Monday and then formally on Tuesday.听Belaruskali听and BPC did not comment. (Additional reporting by Zlata Garasyuta and Victoria Andreeva in听Moscow, Andrei Makhovsky in Minsk, Rajendra Jadhav in New Delhi, Clara Ferreira-Marques in London, Niluksi Koswanage in Kuala Lumpur, Henrik Stolen in Oslo, and Rod Nickel in Winnipeg; Writing by听Polina Devitt听and Megan Davies; Editing by Timothy Heritage, Dale Hudson and Andrew Hay)