India could buy potash from Belarus in rupees as sanctions hit Minsk-sources

Icl

02/02/2022 08:02

(Adds details and background)
    By Rajendra Jadhav
    MUMBAI, Feb 2 (Reuters) - India plans to buy 1 million
tonnes of potash from Belarus in the first such bilateral deal
between the two countries after sanctions crippled Minsk's
ability to sell the crop nutrient, two Indian officials involved
in the discussions told Reuters.
    India has suggested that the state-run Belarus Potash
Company (BPC) could open a rupee account with a state-run Indian
bank for potash sales as sanctions imposed by the United States
and European Union cut off the Minsk from dollar and euro trade,
the officials said.
    BPC is the export arm of Belaruskali, the world's
second-largest potash producer. The U.S. blacklisted Belaruskali
and added BPC to its sanctions list as the West escalated
punitive action against Belarus President Alexander Lukashenko.
    BPC did not respond to a request for comment.
    Potash exports are a key foreign currency earner for Minsk.
 urn:newsml:reuters.com:*:nL1N2SN1N7
    "We are not able to make payments in dollars or euros
because of the sanctions. We need to import potash and we are
finding options to make payments," said a senior Indian official
involved in the negotiations with Belarus.
    India could buy 1 million tonnes of potash in 2022 from BPC
by paying with rupees, said another official, who also declined
to be named because of the sensitivity of the matter. Both said
the deal could be sealed in February.
    New Delhi has made rupee payments to Iran for crude oil
after the U.S. imposed sanctions on Tehran, which used the
rupees to buy rice and other goods from India.
    The Indian government did not immediately respond to a
request for comment.
    India secures nearly all its potash through imports, and
historically about one-fifth of the 4 million to 5 million
tonnes it imports annually comes from Belarus.
    Minsk could offer a discount over benchmark prices as India
has proposed buying at least 1 million tonnes of potash, the
first official said.
    India's exports to Belarus were $62.3 million in the 2020/21
financial year, while its imports stood at $107.4 million,
government data showed.
    India's push to ink a deal comes, even as Belarus was this
week forced to divert potash https://www.reuters.com/world/belarus-diverts-potash-supplies-lithuania-russia-says-pm-2022-02-01
 shipments from Lithuania's Klaipeda port to Russian ports after
Vilnius decided to halt the use of its railway https://www.reuters.com/world/europe/lithuanian-railways-halts-transport-belarus-potash-2022-01-31
 for exports of the commodity from the sanctions-hit country.
    It is unclear how that could affect or delay potential
potash exports to India this year.    
    
    WIN-WIN SITUATION
    Potash imports from Belarus would help both the countries,
industry officials said.
    Belarus has been struggling to sell potash, while India has
been trying hard to contain a price rise after potash prices
jumped to their highest level in more than a decade, a
Mumbai-based company official said, speaking on condition of
anonymity because of the sensitivity of the matter.
    India subsidizes purchases of potash imports to make it more
affordable for its farmers. The Indian government in its annual
budget on Tuesday allocated about 1.05 trillion rupees ($14
billion) to its fertilizer-subsidy program, which is largely
used for potash and phosphate imports.
    About 150,000 tonnes of potash shipments from Belarus have
been stuck because of payment issues, two company officials
said.
    "These are contracts which were signed at lower prices last
year. Shipments are stuck since we couldn't make payments," said
another company official.
    BPC agreed to supply potash to India at $247 a tonne in
early 2021, but it later renegotiated the price to $280. The
commodity is trading at about $650 a tonne in the spot market,
although annual contract purchases made by India, China, Brazil
and other big buyers are typically at lower prices.  urn:newsml:reuters.com:*:nL1N2LY0DM
   
    India's potash imports fell sharply in 2021 because of
higher prices and stocks need to be replenished quickly, the
Mumbai-based company official said.
    India's potash imports in the first eight months of 2021/22
financial year fell 47% from a year ago to 2 million tonnes,
government data showed.
    Canada, Belarus, Russia and Israel are key suppliers of
potash to India.
    BPC competes with Canada's Nutrien Ltd  NTR.TO , Russia's
Uralkali  URKA.MM , Israel's ICL  ICL.TA  and Mosaic  MOS.N 
from the United States.

 (Reporting by Rajendra Jadhav; Additional reporting by Polina
Devitt in MOSCOW; Editing by Euan Rocha and Gerry Doyle)
 ((rajendra.jadhav@thomsonreuters.com; +91-22-68414378 ; Reuters
Messaging: rajendra.jadhav.thomsonreuters.com@reuters.net))