Minsk looks to settle BKK disputes by Sept
MINSK. Aug 28 (Interfax) - Belarusian First Deputy Prime Minister Vladimir Semashko has said he hopes that disputes surrounding CJSC Belarusian Potash Company (BKK) will be settled by the beginning of next month.
"Some of the issues are already dealt with, there are compromise decisions. There remain disputed points on several issues," Semashko told the press in Minsk on Tuesday. "I think that by September 1 all the 'i's will be dotted," he said.
Two issues remain to be coordinated, he said. One is the proportion of [potassium chloride] sales on foreign markets. "That is, how much the Russian side in the person of Uralkali should sell, and how much Belaruskali should sell," he said. "The calculus is like this - half a percent-percent to there, half a percent-percent to here," he said. Also yet unresolved is pricing policy, he said.
"Over all of this is one question: we have to work in one company," Semashko said. "My opinion is this: the existing trade structure [BKK] has to be maintained," he said. BKK "is the first real major integrated Belarusian-Russian project," he said. "No-one is raising the question of scattering, there are several nuances, people that would like to return to 'turbid water,'" he said.
In May 2012, Belarusian Prime Minister Mikhail Myasnikovich and Russian Prime Minister Dmitry Medvedev discussed plans to set up a Belarusian-Russian company, Soyuzkali.
Belneftekhim, the Russian Industry and Trade Ministry, Uralkali and Belaruskali were instructed to submit proposals for establishing the joint venture by September 1, 2012. Soyuzkali is to be created around the BKK facilities by Belaruskali and Uralkali and will take over BKK's function as both companies' exclusive trader.
Currently, Russia and Belarus export potassium through BKK. BKK was set up on a parity basis by Belaruskali and Uralkali in December 2005. BKK shareholders are Belaruskali (45%), Belarusian Railway (5%) and Uralkali (50%). BKK accounts for around 43% of global potassium chloride exports.
Relations with Uralkali within BKK could be reviewed, Belarusian President Alexander Lukashenko said in early July. Belarus repeatedly expressed its discontent over efficiency issues in selling potassium chloride through this trader.
Experts did not rule out a BKK collapse over a shareholders' conflict of interests over the sales policy. One of the major contentious issues was the share of Russia and Belarus in the sale of potassium chloride through BKK, experts said. Russia and Belarus hold equal stakes in BKK's capital, and when they were setting up the company, Belaruskali and Uralkali signed an agreement stipulating that export quotas would be distributed among the main shareholders based on their respective production facilities. At the initial stage, Belaruskali's share was around 60%, Uralkali's 40%.
In 2011, BKK exported 12.9 million tonnes of potassium chloride. Belaruskali's exports stood at 7.7 million tonnes, Uralkali's 5.2 million tonnes. However, the situation changed in the first quarter of 2012, when sales of the Belarusian potassium chloride dropped. According to the potassium market players, Belaruskali's current export quota in BKK sales is around 47%, the rest is Uralkali's.