Investigators in Minsk, Belarus have arrested and charged the head of Russia's largest potash producer Uralkali on charges of abusing its power — just weeks after the company pulled out of a trade venture with its neighbouring country.
Uralkali's chief executive Vladislav Baumgertner was held Monday after being arrested at Minsk airport as he was leaving for Moscow following a meeting with the Belarusian prime minister.
Potash is a key ingredient in fertilizer, and Uralkali and Belarusian state-owned Belaruskali had been exporting the commodity through a jointly-run trading venture since 2005. The venture, which has been accused of fixing the price of potash, suddenly broke up in July when Uralkali accused Belarusian President Lukashenko of allowing Belarusian companies to export potash independently.
Uralkali's shares have lost 20 per cent since it decided to quit the cartel, while the price of potash has fallen by five per cent to $390 US a ton. Uralkali executives have said they expect the price to drop to $300 by the end of the year.
Belarus's Investigative Committee said Monday that they suspect Baumgertner of planning to cause a drop in the potash market by quitting the joint venture "in order to gain material benefits."
Investigators also promised to look into the work of Suleiman Kerimov, a Russian tycoon who owns 22 per cent in Uralkali.
Uralkali's shares at the MICEX exchange in Moscow dropped nearly four per cent on the news. Four other Uralkali executive face similar charges in Belarus, officials said.
Uralkali's spokesman described Monday's arrest of their chief executive as a "crude provocation of Belarusian authorities" and called for Baumgertner's immediate release.
Russian Deputy Prime Minister Igor Shuvalov on Monday expressed the government's concern over Baumgertner's arrest and said that the actions of Belarusian authorities were "strange and improper."
Russia's exit from the potash cartel had repercussions in Canada, where Saskatchewan is home to one of the world's largest deposits of the mineral.
Uralkali's move last week sparked a major selloff in the stocks of potash producers and caused economists to warn Saskatchewan's economy could take a big hit. Credit rating agency Standard and Poor's also revised Saskatoon-based PotashCorp's outlook to negative from stable.