Conflicting Reports On the Sale of Belarus Potash Company

Publication: Eurasia Daily Monitor Volume: 8 Issue: 118

Planned Headquarters of the Belarusian Potash Company

At a press conference in the National Library of Belarus for central and regional media, Belarusian President Alyaksandr Lukashenka denied that his country is in crisis. He defined the latter as a time when enterprises cease production, or else they lack raw materials, they cannot be sold, and people are turned out onto the streets. He also declared his faith in the current structure of the economy (i.e. state-owned) and stated that only a fool would follow the path of Russia and other countries in liberal reforms. Lukashenka maintained that the new exchange rate for the US dollar (4,930 BR) was inflated, and that given the receipt of further credits or cash, the situation in Belarus could be stabilized (BDG Delovaya Gazeta, June 17).

His comments, nonetheless, reflect general perceptions both within and outside Belarus of an unprecedented predicament, which is reflected in the lack of hard currency, greatly depleted reserves of gold, an account deficit of 16 percent of GDP, and discussions concerning the sale or potential sale of the most valuable domestic companies (, June 2). Recently, discussions have focused on the proposed sale of Belaruskali (Belarus Potash), based in Salihorsk, with 20,000 employees, which accounts currently for about 30 percent of global potash mineral fertilizers. The export of potash takes place through a joint stock association called Belarusian Potash Company, formed in April 2005, consisting of the following enterprises: Belaruskali (45 percent ownership), Urals Potash Company (50 percent), and Belarusian Railways (5 percent) (

On June 10, Lukashenka laid out conditions for the sale of Belaruskali, commenting that: “we are absolutely not opposed” to the sale of joint-stock companies, including the potash giant, but that the price would be $30 billion. However, he denied that any discussions had taken place hitherto (Belorusy i Rynok, June 13-19). Evidence suggests that he was not being entirely honest with his interlocutors: on June 10, Russian businessman Suleiman Kerimov, the owner of the Urals Potash Company, was in Minsk for discussions with Lukashenka. One day later Kerimov stated that his investment company, Nafta Moskva, may purchase 51 percent of shares in Belaruskali for $15 billion and that the terms had been agreed to with the Belarusian president (, June 11).

In 2006, Lukashenka vowed to keep Belaruskali in state hands. In January 2011, when asked about the possible sale of the company, he responded that at most 25 percent would be privatized. One reason is that Belaruskali is the most valuable state asset and the prices for potash on the world market continue to rise (Potash Investing News, June 15). However, that comment occurred before the current financial problems began to affect the Belarusian economy. Incidentally, the Urals Potash Company is on the brink of a merger with Silvinit (Solikamsk, Russia), and thus the purchase of Belaruskali would render it the world’s largest producer of potash, overtaking the Saskatchewan, Canada enterprise, PotashCorps. The consolidated firm would then control about 30 percent of world potash production and 45 percent of exports, a major coup for the empire-building Kerimov (Fertilizers, June 10;, June 11).
However, the value of the company remains subject to debate. Lukashenka’s apparent doubling of its price may be a result of the interest of a third party, namely China, which is the world’s largest consumer of potassium chloride and accounts for the purchase of 20 percent of Uralkali’s sales (Fertilizers, June 10).

The discussions of the sale of Belaruskali reflect the desperate need in Minsk for further loans. In the first two weeks of June an IMF team was in Minsk to study the economic situation of the country in light of Lukashenka’s request for a new IMF loan of up to $8.5 billion. However, such a loan may not be forthcoming immediately, for two reasons. First, as noted in a report by Jan Cienski, the IMF is unhappy with the usage of a previous loan of $3.5 billion (it expired in March 2010) on increased public spending and subsidies for state enterprises (, June 2). Second, the IMF may be reluctant to disburse more funds in the light of the recent repressions in Belarus, including the long-term imprisonment of two presidential candidates, Mikalay Statkevich and Andrei Sannikau.

According to former National Bank Chairman, Stanislau Bahdankevich, the sale of Belaruskali is tantamount to the sale of the family silver. With reference to an earlier cited sum of $15 billion for the purchase price, he remarked that it would allow a temporary respite for Lukashenka but would not resolve the most pressing economic problems. These require deep economic reforms, as well as foreign credits and technology. Bahdankevich, now in his 70’s, also revealed that he had rejected a government request to help resolve the crisis, stating that there are younger economists available (, June 8, 9).

In his June 17 speech, Lukashenka tried to be upbeat, and expressed his belief that within a few months, Belarus would extricate itself from its troubles and build up its gold reserves from $5 billion to $7 billion to a level of $10 billion to $13 billion. Economist and former presidential candidate Yaraslau Ramanchuk reportedly commented that Belarus could acquire up to $80 billion by selling off 12 state companies, including, in addition to Belkali, Beltransgaz, Mazyr and Naftan refineries, and the MTS cell-phone company (Belarus Digest, June 7).

The sale of Belkali thus could be the start of a mass sale of state assets, thus emulating –ironically in view of Lukashenka’s disdain– the path that Russia took two decades ago.