Russia wants to enter Potash takeover battle: report

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Russian agriculture firm Phosagro wants to make a rival bid for the world's biggest fertilizer maker Potash Corp to counter a hostile offer by mining giant BHP Billiton, a report said on Wednesday.

The Vedomosti business daily said that the head of Phosagro had written to Prime Minister Vladimir Putin saying that the acquisition of Potash Corp would be a "significant geo-political instrument for the country's leadership."

Phosagro's chief Vladimir Litvinenko is a close ally of Putin from his home city of Saint Petersburg and played a major role in his 2004 presidential campaign, Vedomosti said.

The report said that Putin had handed the dossier to his powerful deputy prime minister Igor Sechin who had now charged state institutions with preparing proposals for the purchase of Potash Corp.

The importance of potash fertilizer has grown over the last years owing to mounting demand for food in the world and rapidly-expanding China is a major importer of the product.

Russia is already a major potash fertilizer producer and Litvinenko told Putin that the country would control 70 percent of the world potash fertilizer market if Phosagro launched a successful bid.

Russia's two leading potash producers, Silvinit and Uralkali, would not be appropriate bidders due to anti-monopoly concerns, Litvinenko said.

"Control over this resource can be seen as one of the necessary elements of state food security," he added.

Phosagro had a a turnover in 2009 of 56.9 billion rubles (1.8 billion dollars) and with political backing it would not fear bidding for the larger Potash Corp, Vedomosti said.

Litvinenko said that financing for half the purchase had already been agreed with Canadian banks while the other half would need to come from Russian financial institutions like the main state lender Sberbank.

Potash Corp is currently valued at 43 billion dollars, Vedomosti said. Phosagro said it was not commenting for the moment.

Anglo-Australian miner BHP Billiton in August launched a mammoth hostile all-cash takeover bid for Potash Corp valuing it at 40 billion US dollars but this was immediately rejected by the Canadian firm.

© 2010 AFP

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