Belarusian potash mines may soon cease production, BMO Capital said this week, after the firm spoke with various potash suppliers, according to a report in real-time financial news publisher The Fly. BMO Capital analyst Joel Jackson said he understands that the last shipment from the potash mines in Belarus to Lithuania was over a week ago and that he would “not be surprised to see the Belarusian potash mines” owned by Belaruskali OAO stopping production “any day,” leading to likely heightened potash supply anxiety and higher imminent prices.
Belaruskali’s key export shipment route for its potash has been blocked since midnight on Jan. 31, when the termination of Lithuanian state-owned railway Lietuvos Geležinkeliai’s (LTG) contract to transport of Belarusian potash to Lithuania’s Klaipėda port came into effect, blocking the export shipment of around 90 percent of Belarus’ potash (GM Jan. 14, p. 1).
The termination of LTG’s contract with the Belarus potash producer followed the Lithuanian government’s decision on Jan. 12 to end the railway contract between LTG and Belaruskali. The decision was taken due to “national security concerns.”
Belarus could begin transshipping potash this year through the Russian port of St. Petersburg and ports in Russia’s Leningrad region, according to an Interfax report on Feb. 9, citing the Russian Ambassador to Belarus, Boris Gryzlov. The ambassador was speaking on the Russia-24 television channel.
Gryzlov said that this direction for transshipping Belarusian goods “will be implemented already this year in the near future,” and “that it could assist Belarus in transshipping its products that are [usually] exported through the Lithuanian port of Klaipėda.”
Leningrad region ports include the Baltic Sea ports of Ust-Luga and Primorsk.
Market participants and analysts, however, have questioned whether sufficient spare transshipment capacity is, and can be, made available at Russian ports to handle an additional 10-12 million mt/y of Belarusian potash. Many believe not.
Belarus state-run news agency BelTA, citing President Alexander Lukashenko, reported this week that Belarus was implementing “a project to increase port capacities for the transshipment of potash in Russia,” and intending to “complete it as soon as possible.”
According to the report, citing Lukashenko, Russia has provided a platform for the project to create additional infrastructure in order to increase the capacity for transshipment of Belarusian potash through Russian ports.
The project is supposedly being financed by private investment from Belarus, and is targeted to enable Belarus to start using the new infrastructure “at least in a year.” However, no hard details were provided.
Last week, Belarus claimed it had started to redirect its potash shipments to Russian ports for onward export, according to a Bloomberg report, citing Interfax, which in turn cited Belarus Prime Minister Roman Golovchenko (GM Feb. 4, p. 33).
The Belarus claim was refuted by Kremlin spokesperson Dmitry Pesov, as cited by a subsequent Interfax report. Pesov said the possible rerouting of Belarusian potash to Russian ports is “on the agenda” and is being discussed, but the re-routing of shipments has not begun just yet, as cited by Interfax.
Belaruskali filed a complaint with the Vilnius Regional Administrative Court last month, seeking to get the Lithuanian government’s decision to terminate the contract between it and LTG annulled (GM Jan. 28, p. 28). The court, which accepted the appeal on Feb. 4, however, is not introducing any interim measures while the appeal is being considered, according to BNS, citing an official of the court.
Other than via Russia, Belarus appears to have few if any alternative transshipment options for its potash. Private carriers in neighbouring Latvia, which like Lithuania, is a European Union Member state, have said no, according to BBC International Reports (Europe) in December (GM Dec. 17, 2021). Ukraine has also refused to participate in the export of Belarusian potash, according to an Interfax report.