In Kola Peninsula, giants fight over mineral fertilizers
Relations between Phosagro and Acron, the two major players in the Russian fertilizer industry, are souring because of conflicting interests in the Kola Peninsula.
Phosagro, the biggest producer of mineral fertilizers in Russia, has stopped its deliveries of apatite concentrate to Acron’s processing plant outside Novgorod. The official reason is a disagreement over raw material prices. While Phosagro argues that it is entitled to get 6950 RUB/ton of apatite concentrate, Acron says that the correct price is 3771 RUB/ton, newspaper Vedomosti reports. However, several other reasons lure in the background.
Akron believes the actual reason for the conflict is Phosagro’s alleged attempt to hamper the Oleny Ruchey project, Akron’s giant apatite ore mine in the Kola Peninsula due to open in 2013. The Oleny Ruchey will enable Acron to produce all the ore it needs for its processing plants and consequently cut the current dependence of Phosagro.
Analysts also point at the upcoming privatization of 20 percent of Apatit, the key subsidiary of Phosagro. An auction on the Apatit stake is planned held in this June. As previously reported, Acron will be a key bidder in the auction, along with Uralchem, and possibly also the Fleming Family & Partners, Renaissance Capital and Sberbank Investments
Phosagro will however do what it can to counter the bids and itself acquire the state-owned Apatit stake. In that case, Phosagro will boost its control over Apatit to close to 100 percent. Phosagro is owned by Andrei Guriev, the business tycoon and senator for Murmansk Oblast.
Acron blames Phosagro for the strained corporate relations. In a press release, the company writes that “Phosagro, unfortunately, has chosen its traditional method of abusing its dominating [market] position and application of economic pressure”. The stopped deliveries of mineral concentrate to the Acron plants are based on “constructed reasons” from the side of Phosagro, the press release adds.