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Uralkali CEO Defends Potash Pricing on China, India Contracts

OAO Uralkali, the world’s largest potash producer by output, will seek to maintain prices as it prepares to sign contracts with India and China and global droughts impoverish the soil, said Chief Executive Officer Vladislav Baumgertner.

“We will do our best to protect the current prices,” Baumgertner said in an interview at Bloomberg headquarters in New York yesterday. “We see a stable price environment in key markets this year.”

Dry weather in countries including the U.S., Australia and Russia this year has left soil parched, damaging crops. Potash, a form of potassium, is used by farmers to strengthen stalks and roots and help plants fight disease.

Uralkali jumped 2.9 percent to $42.18 by 1:12 p.m. in London, heading for the highest close since July 20. The shares rose 0.8 percent to 259.22 rubles in Moscow, extending its gain this year to 11 percent. The ruble-denominated Micex benchmark stock index has gained more than 9 percent in 2012.

Uralkali will probably sign a new contract with China by November and a new contract with India “immediately after that,” he said. Belarusian Potash Co., a trader part owned by Uralkali, has held the potash price for China at $470 a metric ton since the second half of 2011, and for India at $490 a ton since August 2011.

The devaluation of the Indian rupee and an end of subsidies for farmers reduced demand for Uralkali’s potash, Baumgertner said. China and India could generate an increase in fertilizer consumption if the nations focus on domestic food production as opposed to imports, he said.

“We don’t see governments in China and India acting rationally,” Baumgertner said. “But we see huge potential there.”

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