Belarusian government owns quite a valuable asset which currently generates very significant and steady flow of foreign currency for the country. Belaruskali is world’s third largest (15%) supplier of potash (potassium chloride or KCl). Recently the global potash business has enjoyed lots of attention. Fertilizer industry becomes more and more lucrative fueled by $40 billion hostile takeover attempt by BHP Billiton Ltd of Canada’s Potash Corp. of Saskatchewan Inc, high food prices buoyed by population growth, droughts, floods and other natural disasters. Even though the price of potash has gone down from its highest point in history of more than $800 per metric ton in early 2009 to around $350 per mt today, many industry analysts predict that it can go as far as $1500 per mt within next ten years.
Belaruskali (unlike cheap energy resources from Russia) is the only cash cow over which Lukashenko has a total control. However, if relations with the neighbor to the East will continue worsening the cow can very quickly end up on a dinner table. First steps in this direction were already taken. On September 27 the process of corporatization of the state owned company was completed. It means that now all obstacles have been removed and a minority stake can be sold any time.
It’s unlikely though that the sale will take place before presidential elections because such move can weaken Lukashenko’s image in the eyes of the electorate. But after elections extra $7 billion that can be raised in such a sale can be very helpful to cover shortfalls in the budget (2009 budget was $22Bln). The most likely buyer is Chinese firm (state owned CITIC Group?). It makes sense because Lukashenko will not sell it to Russian billionaire Suleiman Kerimov and partners who have control over Uralkali and Silvinit because of political tension between the two countries. On another hand, China is world’s largest consumer of potash and has to import most it. Having a stake in Belaruskali who has a 45% stake in Belarusian Potash Co. (potentially world’s largest potash trading company) makes perfect strategic sense. In return Belarus can diversify its partner base by increasing trade, improving business relations and potentially receiving investments from Chinese companies.