Minsk expects Uralkali to explain $1 bln in loans backed by BPC shipments
MINSK. Aug 28 (Interfax) - The Belarusian authorities are looking into the circumstances of $1 billion in loans that Russian potash giant Uralkali took out using the commodity flows of Belarusian Potash Company (BPC) as security, Mikhail Zhukovsky, an independent expert who is a member of the special working group Belarus set up to investigate the situation at BPC and Belaruskali.
"There is information that Uralkali took out loans of more than 40 billion rubles backed by BPC commodity flows, which amounts to more than $1 billion. And this despite the fact that this company's product shipments through BPC did not exceed $650 million. Experts are now sorting out this episode," Zhukovsky said on television channel Belarus-1.
He said this issue has been raised repeatedly with Russian colleagues so that they could explain what was happening and what commodity flows were used as collateral for these loans. "No response has been received from the Russian side yet," Zhukovsky said.
He remarked that Uralkali has a very heavy debt burden. "[Russian billionaire] Suleyman Kerimov himself bought the company with borrowed money that he will also have to repay. This issue is also on the agenda," Zhukovsky said.
He said Uralkali's hostile actions toward BPC and Belaruskali began in 2010, and the events of recent days are the "culmination of the strategy that Uralkali chose for itself."
Zhukovsky recalled that about a month ago Uralkali and the Belarusian leadership signed an agreement that resolved virtually all problematic issues between the partners. "But the Russian side, having signed the protocol, not only did not proceed to implement it, but also opted for open provocation in regard to Belarus," he said.
He said Uralkali has been taking persistent actions since 2010 aimed at weakening Belaruskali's potential on the world market, reducing its market capitalization and turning it into an unprofitable company. As a result, Uralkali would have been able to buy the Belarusian company at a knockdown price or "simply collect it for debts," Zhukovsky said.
He said Uralkali is a "company whose mines are drowning," and that has big problems with potash fertilizer production and exports, since the railway network in the direction of the Baltic is very congested in Russia.
"Belaruskali clearly looks stronger, has a better geographical position, more efficient access to port infrastructure, and better quality products. In other words, the Belarusian company is a very serious competitor," Zhukovsky said.
"And everyone's aware that the world potash market will not change and the price situation will remain the same. Certain market fluctuations are possible, but the main price parameters of the potash market will remain. In a situation where Uralkali is no longer a partner of Belaruskali, it is possible to say that the Belarusian producer might gain an additional advantage," Zhukovsky said.
