blogs.ft.com/beyond-brics/2014/02/10/...p-the-queue-in-brazil/
Uralkali: looking to jump the queue in Brazil
Feb 10, 2014 4:12pm
Russian potash producer Uralkali has decided to invest in port infrastructure in Brazil in a move to bolster its position in the world’s fastest growing fertilizer market.
In a statement on Friday, Uralkali said it had acquired a 25 per cent of Equiplan Participaceos, the main shareholder in Terminais Portuarios da Ponta do Felix, a terminal in the city of Antonina on Brazil’s southern coast.
“Brazil is traditionally one of the most active users of potash fertilizers,” said Oleg Petrov, Uralkali sales and marketing director. “This investment will enable us to make another step towards expanding operations in Latin America.”
Uralkali has not disclosed the terms of the deal. However, a source familiar with the transaction told Kommersant, that the Brazilian acquisition had cost $35m –roughly 2 per cent of Uralkali’s estimated 2013 earnings before interest, tax, depreciation and amortisation.
World fertilizer producers are competing fiercely in Brazil where an agricultural boom is driving unprecedented demand for crop nutrients. Total fertilizer imports rose by 10 per cent to a record 21.6m tonnes last year. Imports of potash –used to strengthen soy bean and corn crops –rose even faster by 40 per cent.
All the same, some analysts have been wondering why Uralkali is splashing out on an indirect, minority stake in a Brazilian port, particularly at time of uncertainty in potash markets.
World potash prices have yet to recover from the slump last year that followed the acrimonious collapse of a trading venture between Uralkali and a company in Belarus that had controlled about two fifths of world supplies.
Agreeing a first half 2014 supply deal with China last month, Uralkali agreed to sell potash for $305 per tonne, 24 per cent less than before the demise of the Belarus cartel.