12 Aug 2009 14:11

Several Russian fertilizer producers accuse Silvinit of imposing unfavorable contracts

MOSCOW. Aug 12 (Interfax) - Several Russian mineral fertilizer companies have sent fellow producer Silvinit a joint letter accusing one of its affiliates of violating government resolutions by imposing unfavorable terms on potash chloride contracts.

The companies - Acron , Dorogobuzh , Kirovo-Chepetsk Chemical Works, Voskresensk Mineral Fertilizers and Rossosh-based Mineral Fertilizers (Minudobreniya) - have accused affiliate Mineral Trading LLC of offering potash chloride contracts that envision prices for domestic producers being directly dependent on export prices.

Meanwhile, Silvinit has said it sent complex fertilizer producers contracts for signing on the supply of 247,500 tonnes of potash chloride until the end of the year at a fixed price of 3,955 rubles per tonne - a price proposed by the companies themselves.

"Our companies have indeed received contracts from Mineral Trading. But, in violation of resolutions passed at government meetings, these contracts envision prices for domestic producers being dependent on export prices for potash chloride. Either Silvinit general director R.K. Sabirov was misinformed about the actions of its trading affiliate Mineral Trading or this was a deliberate distortion with the goal of misleading the Russian government and business community," the statement says.

"The participants in the joint statement once again state that the price formula for raw materials that is being imposed by [Silvinit] and is tied to global potash chloride prices is unfounded and unacceptable. We never proposed signing agreements on potash chloride supplies on such terms with either Silvinit or Mineral Trading," it says.

Silvinit issued a statement on Tuesday accusing Acron, Dorogobuzh, Kirovo-Chepetsk Chemical Works, Voskresensk Mineral Fertilizers and Minudobreniya of "not signing potash chloride contracts and not explaining why." Silvinit said other companies, such as EuroChem Mineral Chemical Company and Meleuz-based Minudobreniya, have already signed long-term contracts.