Beaten down potash stocks rally as Uralkali CEO arrested

Peter Kennedy Peter Kennedy, Stockhouse
469 Reads | 0 Comments | 1 hour ago

 

North American potash clawed back some lost ground Monday amid reports that Belarusian authorities have detained the head of Russia’s top potash producer Uralkali following a meeting with Prime Minister Mikhail Myasnikovich.

Potash stocks have been under pressure since Uralkali announced on at the end of July that it was quitting a joint venture with state-owned Belaruskali, which had been exporting potash through a jointly-run venture since 2005.

The venture, which has been accused of fixing the price of potash, suddenly broke up in July when Uralkali accused Belarusian President Lukashenko of allowing Belarusian companies to export potash independently.

Potash is a key ingredient in fertilizer.

These developments sparked fears that Uralkali would deliver on a threat to sell directly to China, potentially driving potash prices down by about 25%, potentially delivering a crushing blow to Canadian potash producers who sell via a rival entity called Canpotex, which has the ability to set prices because it is so large.

But the latest reports from Belarus are causing speculation among traders that Uralkali may be forced to rejoin the cartel.

Potash Corp. of Saskatchewan Inc. (TSX: T.POT, Stock Forum), the market leader, was up 2.2% to $32.04 Monday, leaving a market cap of $27.8 billion, based on 867.7 million shares outstanding. The 52-week range is $45.98 and $29.67.

Mosiac Co. (NYSE: MOS, Stock Forum) climbed 1.9% to $42.69, leaving a market cap of $12.7 billion, based on 425.8 million shares outstanding. The 52-week range is $64.65 and $39.75.

Agrium Inc. (TSX: T.AGU, Stock Forum) was up 3% to $93.72, leaving a market cap of $13.8 billion, based on 148.7 million shares outstanding. The 52-week range is $116.38 and $83.46.

Smaller companies in the sector also rallied on the news.

Karnalyte Resources Inc. (TSX: T.KRN, Stock Forum) saw its stock price rise 3% to $2.04, leaving the company with a market cap of $56.o6 million, based on 27.5 million shares outstanding. The 52-week range is $9.65 and $1.85.

Passport Potash Inc. (TSX: V.PPI, Stock Forum) jumped 5% to 10.5 cents, leaving a market cap of $19.3 million, based on 183.6 million shares outstanding. The 52-week range is 26 cents and 14 cents.

Belarus's Investigative Committee said Monday that they suspect Baumgertner of planning to cause a drop in the potash market by quitting the joint venture ``in order to gain material benefits.''

A Bloomberg report said the CEO faces up to 10 years in prison if found guilty of abusing his office as chairman of Belarusian Potash Co.

Belarus is also seeking the arrest of four other Uralkali executives, accusing them of a scheme to cut state-owned Balaruskali out of decision-making in the venture, the Bloomberg report said.

Investigators also promised to look into the work of Suleiman Kerimov, a Russian tycoon who owns 22 per cent in Uralkali. with files from The Canadian Press and Bloomberg.