Belarus’ Lukashenko upbeat on potash prospects as sanctions bite

LONDON (ICIS)–Belarusian President Aleksandr Lukashenko marked the Miners’ Day holiday with a fresh endorsement of the nation’s muriate of potash (MOP) fertilizer industry.

In comments recorded by Belarusian state-run newswire BelTA on 27 August, Lukashenko said: “We are lucky our soil is rich in red gold. The demand for potassium is huge and is increasing every year.”

Belarus supplies around 20% of the world’s potash volumes, and was targeted for sanction by the EU and other western countries earlier this year, following the diversion and forced grounding of a passenger airline transporting dissident Roman Protasevich.

The activist remains under arrest.

The EU’s sanctions, imposed in early July, neatly sidestepped one of Belarus Potash Company’s (BPC) – the sales arm for Belaruskali – primary exports, that of potash with 60% potassium content.

The remaining products that do face sanctions account for approximately 18-20% of BPC’s annual export tonnage, it is understood.

However, the sanctions do call into question the continued viability of BPC using Lithuania’s Klaipeda port, as the EU member state may be required to cease exports of Belarusian MOP under the restrictions.

Klaipeda has long been BPC’s preferred port; ideally placed for the Belarusian major’s key export destinations: China, India, Brazil, and southeast Asia.

Lukashenko, however, simply pointed to long-time ally Russia for a solution.

“We will deliver these volumes. We will load them in Murmansk. Not a problem. And we will deliver them to China via the shortest Northern Sea Route,” the President said in mid-August.

The next few months will be critical for Belarus’ potash industry as it tries to answer customers’ “what if” questions:

If Lithuania’s port becomes unavailable, can Lukashenko thrash out an agreement to transport tonnes via train to Russian ports for export?

Would such a route offer the security of supply MOP buyers demand in a market witnessing decade-high prices?

Would a jaunt across Russia increase logistics costs so much that rival MOP majors’ tonnes will appear more agreeably priced for buyers?

The longer these questions go unanswered, the clearer the effect on the global MOP market.

Offer prices have been ticking up steadily into southeast Asia, while in Brazil landing prices now north of $700/tonne CFR (cost & freight) – more than double year on year.

Brazilian buyers have retreated from the market amid the discord; adopting a wait-and-see stance.

They are not the only regional buyers concerned by the potential market-moving effects of the sanctions on long-established supply lines.

Belaruskali MOP production statistics (approximate)

H1 2021 (m/tonnes)	H2 2020 (m/tonnes)	Change	Jan-Jul 2021 exports (m/tonnes)	Jan-Jul 2020 exports (m/tonnes)	Change
6.496	5.341	22%	6.980	6.320	10.4%
*Source: Belaruskali, via BelTA

Focus article by Andy Hemphill