Russian tycoons Prokhorov, Mazepin take control of Uralkali

Russian businessman and politician Mikhail Prokhorov's investment vehicle Onexim Group and Dmitry Mazepin's fertilizer firm OAO Uralchem have agreed to acquire a combined 47-per cent stake in the world's largest potash company OAO Uralkali, a deal which is expected to resolve the conflict between Uralkali and its Belarus partner Belaruskali.

Uralkali's previous chief executive Vladislav Baumgertner scrapped the alliance in July by quitting from the world's largest potash cartel Belarus Potash Co (BPL) alleging that its partner undermined sales records. (See: Potash industry in turmoil after Uralkali quits cartel)

BPL controlled 40 per cent of the $20 billion global market for potash, a major crop nutrient. Further to the collapse of the cartel, potash prices plunged and share prices of big potash miners also plunged by as much as 27 per cent.

In a statement, Uralkali confirmed that Onexim had completed the acquisition of 21.75-per cent stake in Uralkali from tycoon Suleyman Kerimov's foundation, according to the plan revealed earlier in November, although the value of the transaction has not been disclosed.

Separately, another company controlled by Prokhorov bought 5.34 per cent held by Kerimov, bringing up his stake in Uralkali to 27 per cent.

Also, Mazepin's fertilizer firm Uralchem has completed the purchase of 20-per cent stake in Uralkali for approximately $2.9 billion.

Belarus president Alekdandr Lukashenko had demanded Kerimov's exit from the company before talks could resume on the alliance.

Following the break-up of the alliance, Belarus detained Baumgertner charging him with power abuse and embezzlement. Later, he was extradited to Moscow in November and still remains under house arrest.

Uralkali has persistently defended Baumgertner and denied any wrongdoing on his part.

It has been reported that Uralkali's new owners will appoint a new chief executive for the company in the coming days.

Dmitry Osipov, deputy chairman of Mazepin's OAO Uralchem, will replace Vladislav Baumgertner, citing some sources, Bloomberg News reported, although Uralchem declined to comment on the matter. 

Berezniki-based Uralkali controls about 20 per cent of global potash production. The company's assets consist of 5 mines and 7 ore treatment plants in the Perm region of Russia. Its shares and GDRs are traded on the stock exchanges of Moscow and London.

Last week, Uralkali secured a $2-billion loan from Sberbank which the company said that will be used as a reserve facility for refinancing existing loans.

The company reported 19-per cent drop in its Q3 revenue at $856 million, partially due to customer concerns following the break-up of the cartel.

Uralkali plans to boost potash production by 20 per cent in 2014 anticipating increased global demand for the commodity in 2014, particularly in China, India, Brazil and Southeast Asia.