The virtual potash cartel comes to terms

A Russian deal could bring an end to the international price war over the important fertilizer.

By Jim J. Jubak Sep 13, 2013 4:36PM

Image: Wheat field © Don Paulson Photography/SuperStockShares of producers of potash fertilizer popped on Friday, on news that Russian tycoon Suleiman Kerimov will sell his stake in potash producer Uralkali to investor Vladimir Kogan for $3.7 billion.


The thinking is the sale might end the fight between Uralkali and Belarus producer Belaruskali that led the two companies to break their partnership, which controls about 40% of global potash capacity, and set off fears of a collapse in the price of potash.


Shares of Potash Corp. of Saskatchewan (POT) closed up 2.14% for the day; shares of Mosaic (MOS) were ahead 3.65% and shares of Germany’s K+S were up 4.5% (Potash of Saskatchewan is a member of my long-term Jubak Picks 50 portfolio).


Kogan is very closely tied to Russian president Vladimir Putin; he’s been dubbed Putin’s banker. The sale of Kerimov’s 21.8% stake in Uralkali would put shares in the hands of the banker who would, the market presumes, look to rejoin the partnership with Belarus. The semi-official nature of the deal is clear from the involvement of Sberbank and VTB, both big Russian banks with strong Kremlin connections.


The deal is likely to take a couple of weeks to work out -- among other details to be negotiated would be the release of Uralkali’s CEO Vladislav Baumgertner, who was arrested by Belarus on Aug. 26.


Since ending its partnership with Belaruskali, Uralkali, widely thought to be the world’s low-cost potash producer, has ramped up production after having run at an average of 70% of capacity in 2012. That has driven potash prices down toward $300—a level that Uralkali has recently said is unlikely to be breached.


Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund did not own shares of any company mentioned in this post as of the end of June. For a complete list of the fund’s holdings as of the end of June see the fund’s portfolio.


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Tags: MOSPOT
2Comments
Sep 15, 2013 8:34AM
avatar

Yawn.

Abolish the Gramm Leach Bliley Act... Glass Steagall restores by default. Once it does, banks have to segregate their services again, collusion is illegal- even if Phil Gramm slipped his Crap Act into another and got it enacted by device. While they are weak, we can force them to be reconciled, regulated and force-supervised. We can jail the banksters and revive the means to recover ourselves. It's time... Close the banks... end the Federal Reserve and get RID of Wall Street. Call your members of Congress. Threaten to put them in Katrina trailers for life if they don't cooperate and finally do America some good.  

Sep 16, 2013 7:20AM
avatar

To the deadbeats in DC:

 

I think it's crystal clear that rolling out Obamacare right now is a fatal mistake.
The nation is polarized on the fact that finance is broken, tyranny rules and control isn't in the hands of real Americans.
There is a job blockade. Those in management now run platforms that push paper and buttons. They don't create economy by any means. Globalization is a bust. You act based on the highest bidder... not the nation. Get out of Syria, FIX Detroit!
Could we by YOUR actions and inactions, be any more Un-American? There is a need to FIX THIS or resign today. Stop trying to push agenda and get the PEOPLE standing up and living again. We are well within our rights to ORDER you to establish stability for all right now.
Feel free to prove me wrong by standing before us and reciting EVERY law by memory. How can you expect adherence with so much confusion? Crash the markets. Close the banks. End the Federal Reserve or put a HUMAN in there, instead of an idiot with degrees. Go review video footage of Obama's term. The pageantry is there but the ACTIVITY is not. We needed leaders... not losers.

Every suppressed person gets individual support and restoration. We have NO ECONOMY, QE funded terrorism. Reverse and recollect it OR ELSE.
FIX THIS OR LEAVE TODAY.

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