Russian President Calls for Investigation Into Domestic Fertilizer Prices

Russian President Dmitry Medvedev called for an investigation into domestic fertilizer prices, claiming that local producers act as a cartel. Shares in OAO Uralkali and OAO Silvinit, Russia’s two potash miners, fell.

“If not on paper, then in spoken form, there exists a cartel and this all must be investigated as part of an antitrust process and punished,” Medvedev said today at a government meeting at Voronezh, in southwest Russia.

Russia’s Anti-Monopoly Service has fined both potash miners for acting in collusion, most recently in June, arguing that as the country’s only producers of the soil nutrient, they’d worked together to push up prices. Uralkali and Silvinit, which sell products to Russian farmers at a discount to global prices, say the domestic makers of complex fertilizers compete with them on exports after buying potash from miners as a raw material.

Uralkali, based in Berezniki, fell 2.4 percent to 124.45 rubles at 4:47 p.m. in Moscow, the most in two weeks. Silvinit, based in Solikamsk, reversed an earlier gain to drop 0.7 percent to 20,211 rubles in Moscow.

“The president is likely referring to the old conflict between the potash miners and the makers of complex fertilizers, for whom potash is one of the ingredients,” Anna Kupriyanova, analyst with UralSib Financial Corp., said in an e-mail. “The latter want to buy potash at a discount to foreign markets, to which the former don’t agree.”

Higher potash prices hurt OAO Acron, OAO UralChem and OAO EuroChem, the country’s biggest makers of complex fertilizers, Kupriyanova said.

Acron, based in Veliky Novgorod, reversed an earlier drop to gain 0.5 percent to 913 rubles in Moscow. UralChem and EuroChem are privately held.

To contact the reporters on this story: Lyubov Pronina in Voronezh at lpronina@bloomberg.net; Yuriy Humber in Moscow at yhumber@bloomberg.net

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