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Stephen Mihm

A Century of International Potash Intrigue

Potash has long gone hand in hand with geopolitical power plays.

In case you didn't notice, the world's potash markets went haywire last week, after the announcement that Russia's OAO Uralkali, the world's largest producer of this crucial ingredient in fertilizer, suspended its participation in an alleged cartel with its long-time Belarus partner Belaruskali. Their joint marketing venture, the Belarusian Potash Co., produced at its peak 40 percent of the world's potash, with much of the balance coming from Canpotex Ltd., another syndicate based in North America. Together these two set production quotas and divided global markets, ensuring stable prices and steady profits.

Uralkali's motives for pulling out remain murky: It's possible the company wants to coax Belaruskali into stricter compliance with their agreement's terms. More likely, by letting potash prices bottom out, Russia hopes to gain influence over Belarus and its autocratic leader, Aleksandr Lukashenko. Belaruskali is the most profitable company in Belarus, accounting for almost 6 percent of total exports. Should potash prices plummet, Belaruskali will become susceptible to a Russian takeover bid. That Uralkali's majority shareholder, billionaire Suleiman Kerimov, is a reputed front man for the Kremlin increases the likelihood of this scenario.