Russia's Acron Could List in Canada to Tap Potash Deposits There, CFO Says
OAO Acron, Russia’s third-largest nitrogen fertilizer producer, said it’s considering listing in Toronto to tap potash fields in Canada and end its reliance on raw-material suppliers.
Acron expects to complete exploration next year at some 30 potash deposits in Saskatchewan, which together may hold recoverable reserves of 6 billion metric tons of the soil nutrient, Chief Financial Officer Alexei Milenkov said in an interview yesterday at the company’s phosphate-mining project in Murmansk, northwest Russia.
“One of the options we’re looking at is a public share offering in Toronto,” he said. “The project should be independent and not rely on the financial resources of the parent company.” Acron may also seek a strategic investor, he said, without commenting further.
Russia’s biggest makers of complex fertilizers, including OAO UralChem and OAO EuroChem, are seeking to counter the effect of rising prices for nitrogen, phosphate and potash as shrinking arable land and rising world food demand spur consumption. Acron plans to spend about $3.5 billion building phosphate and potash mines in Russia to increase its own supply of raw materials.
Acron’s Oleniy Ruchey phosphate mine, located about 1,000 kilometers (620 miles) northeast of St. Petersburg, will open in March 2012 and by the end of that year should reach output of 1 million metric tons, said Milenkov. Acron’s annual consumption of phosphate is about 700,000 tons.
Increased Self-Sufficiency
The company is also developing the Talitsky potash site in the Urals region of Perm, in western Russia. Acron expects to start mining at the site in 2016 and reach maximum capacity in 2018, Milenkov said.
Increasing its self-sufficiency in raw materials “is the right strategy” for Acron because of the rising cost of basic components, said Elena Sakhnova, an analyst in Moscow at VTB Capital.
Acron rose 1.24 rubles, or 0.1 percent, to 914.50 rubles at the 6:45 p.m. close in Moscow trading.
Acron’s billionaire owner Vyacheslav Kantor, ranked as the 48th-richest man in Russia with a fortune of $1.3 billion by Forbes magazine, told Prime Minister Vladimir Putin in July that his company’s profitability was being hurt by “monopolists.”
OAO Silvinit, Russia’s largest potash producer, and rival OAO Uralkali are controlled by billionaire Suleiman Kerimov and his partners, who plan to merge the two companies.
Long-Term Contracts
Kantor asked Putin to help persuade potash producers to grant long-term supply contracts, rather than the current six- month pricing arrangements. Russian President Dmitry Medvedev on Sept. 6 called for an investigation into domestic fertilizer prices.
Uralkali and Silvinit, which sell products to Russian farmers at a discount to international prices, say the domestic makers of complex fertilizers compete with them on exports after buying potash from miners as a raw material.
In July, Uralkali agreed to supply potash to Acron at 4,300 rubles ($132) a ton until the end of the year, which represents a 40 percent discount to the export price from Russia, said VTB’s Sakhnova.
To contact the reporter on this story: Henry Meyer in Koashva, Russia via the Moscow newsroom at +7- hmeyer4@bloomberg.net
To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net
Rate this Page