Belaruskali Gets Tax Exemption Amid Dispute With Russia

Belaruskali, the Belarusian state fertilizer producer, won’t have to pay tax on potash exports until the end of the year, potentially giving it more leeway to negotiate prices with buyers.

Belarus removed the levy “to enable the stable work of Belaruskali,” President Aleksandr Lukashenko’s press service said today in an e-mailed statement. The company has been paying tax of 75 euros to 85 euros ($98.40 to $111.50) a metric ton.

Lukashenko is taking steps to boost the standing of the country’s potash industry on the global market after Belaruskali’s Russian partner OAO Uralkali quit their joint trading venture in July. Removing tax obligations may help the Belarusian producer undercut prices charged by its competitors.

“Lukashenko’s decision to annul export tax seriously increases Belaruskali’s competitivenesses,” Konstantin Yuminov, an analyst at Raiffeisenbank in Moscow, said by phone. “This will reduce Belaruskali’s cash cost per ton of potash to about $150 including cost of shipment to port, which will be almost in line with what Uralkali has.”

Belaruskali Deputy Chief Executive Officer Anatoly Makhlai declined to comment when reached by phone today.

Uralkali has the lowest costs of any major producer. Its July decision to exit the joint trading arrangement, which controlled more than 40 percent of global potash exports, upended the $20 billion-a-year industry. A month later, Uralkali CEO Vladislav Baumgertner was arrested in Minsk, Belarus, for abuse of office. He could face 10 years in prison if convicted.

Russia has objected to Baumgertner’s detention, saying in a government statement it’s “unacceptable.”

Lukashenko also today allowed Belaruskali to defer paying $146.5 million to develop Belarus’s Petrikovskoye potash deposit until December 2014, and ordered the creation of a new potash trading company to replace the former joint venture.

To contact the reporter on this story: Aliaksandr Kudrytski in Minsk, Belarus at akudrytski@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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