The U.S. fertilizer industry was abuzz late in the week with speculation that a new trade action against a Belarusian state company would prevent certain nitrogen or potash cargoes from being imported into the U.S. However, representatives of trading companies and the U.S. Treasury Department, which took the action, said there is no need to worry – at least for now.
Specifically, on Nov. 13, the U.S. Treasury designated Belarus’ largest petrochemical conglomerate under Executive Order 13405 as being controlled by oppressive Belarusian president Alexander Lukashenko.
“Today’s action tightens our sanctions against Lukashenko and his cronies by imposing financial sanctions against a massive conglomerate under the regime’s control,” said Adam Szubin, Director of Treasury’s Office of Foreign Assets Control (OFAC).
Belarusian State Concern for Oil and Chemistry, a.k.a. Belneftekhim, along with its representative offices in Germany, Latvia, Ukraine, Russia, and China, and its wholly-owned U.S. subsidiary Belneftekhim USA, Inc., were added to Treasury’s list of Specially Designated Nationals and Blocked Persons, with the result that any assets the entities hold under U.S. jurisdiction must be frozen, and U.S. persons are prohibited from transacting or doing business with the designated entities.
The action follows the 2006 blocking of the assets of Lukashenko and nine other senior officials of his administration. In February 2007, Treasury blocked the assets of another 6 high-ranking Belarusian officials, bringing the total number of designated officials to 16.
There was speculation within the fertilizer industry that the action could impact trade by Belarusian Potash Co. (BPC) and nitrogen maker PO Azot Grodno. However, BPC and ConAgra Fertilizer Co., which buy nitrogen products from Grodno, both indicated that there was no impact to their companies. While Belneftekhim may have done business with Belaruskali, the Belarus potash producer, and Grodno, it does not own them. Belneftekhim is believed to be involved in operating the potash mine, but not in its ownership. BPC is a joint venture that markets the potash of Belaruskali and Uralkali.
A Treasury spokesperson told Green Markets that Treasury’s prohibition is against companies doing business with Belneftekhim directly.