Lithuania’s Kėdainiai-based phosphate fertilizer producer and EuroChem Group AG subsidiary AB Lifosa halted operations on April 10 after banks froze the company’s accounts around a month ago, according to a report by Lrt.It, the website of the Lithuanian national broadcaster, LRT.
According to the report, Lifosa’s bank accounts were frozen due to the European Union (E.U.) sanctions imposed on EuroChem Group’s former controlling shareholder and CEO Russian billionaire Andrey Melnichenko on March 9 (GM March 11, p. 1). Melnichenko subsequently resigned from the EuroChem board and withdrew as a main beneficiary of the group following his inclusion on the E.U.’s expanded list of sanctioned Russian individuals.
Melnichenko had previously controlled 90 percent of EuroChem Group via Cyprus-based AIM Capital SE. A EuroChem statement on March 10 announcing the Melnichenko step-down did not specify how the company’s ownership would be re-structured.
Lifosa exported 398,881 mt of DAP in 2021, which was a 27 percent reduction on 2020 export volumes of 543,398 mt, according to Trade Data Monitor. The company has a DAP production capacity of 1 million mt/y.
The producer has a four-month operation plan and hopes to resume production at a reduced capacity in May, according to the report, citing Lifosa CEO Rimantas Proscevičius.
According to the CEO, the company could produce two types of products completely disconnected from its links with Russia and Belarus, with raw materials sourced from elsewhere and payments made through a Lithuanian bank.
In the meantime, some employees will continue to work and carry out essential maintenance work. Lifosa employs more than 1,000 people. However, the head of the company’s trade union, Kestas Šlama, was earlier cited by a Baltic News Service (BNS) report that some 300 to 400 workers may have to be laid off if production was suspended.
Lifosa has been allowed to access some of its frozen funds in order to conduct some essential financial transactions after Lithuania’s Ministry of Foreign Affairs granted an exemption, BNS reported. These transactions include payments of salaries and wages to employees and payments for services necessary for the company’s activities.