Russian merger to forge potash giant: source

17th December 2010, Comments 0 comments

Two major Russian chemical companies will next week discuss a merger creating the world's second-largest producer of potash fertiliser, a source close to the negotiations said Friday.

The merger between Uralkali and Silvinit "will be discussed Monday," the source told AFP.

If successfully completed, the merger would create a giant responsible for 19 percent of the world's potash production, placing it second behind Canada's Potash Corp, which has a 23-percent share of the growing market.

The Kommersant business daily cited three company sources as saying that the merger would be approved Monday by the Uralkali board.

The full merger would be completed by the middle of 2011, with the resulting company headed by the Russian billionaire Suleyman Kerimov, a member of the upper house of parliament, who holds a 25 percent stake in Uralkali.

The company is Russia's second-largest potash producer behind Silvinit, producing 2.6 million tonnes of the fertiliser in 2009, when it reported revenues of 33.8 billion rubles (1.1 billion dollars), according to Kommersant.

Rumours of the potential merger first hit the Russian market when Kerimov acquired his stake in Uralkali in June.

Two months later, the Russian media reported that Kerimov's relatives had acquired a 44-percent stake in Silvinit through two separate share purchases.

The group of new owners then appointed former Uralkali CEO Vladislav Baumgertner as the new director of Silvinit.

Russia is the world's second-largest producer of potash behind Canada and ahead of Belarus, according to the United States Geological Survey.

The importance of potash fertiliser has soared over the last years owing to mounting demand for food in the world. Rapidly-expanding China, which has also expressed an interest in Potash Corp in light of the BHP Billiton bid, is a major importer of the product.

© 2010 AFP

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