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MOSCOW (TheStreet) -- The combination of two Russian potash miners -- a deal that's been in the works for months -- will further consolidate an industry already criticized for being concentrated in the hands of just a few mega-producers.

On Monday,




officially announced their widely expected merger agreement, which will create the second-biggest potash miner in the world. The deal was spurred by the Russian billionaire-oligarch Suleiman Kerimov, who has a controlling interest in both companies.

Analyst say the merger will be a boon to the worldwide potash hegemony. Two cartels -- Canpotex, whose members include Canadian and U.S. companies, and BPC, a Russia-based partnership between Uralkali and rival Belaruskali -- effectively control potash pricing in the key international markets of China, India and South America.

Silvinit, however, had been an independent player. As such, "fairly or unfairly, people have always viewed Silvinit as a quote-unquote bad player in the industry," said Edlain Rodriguez, an agriculture and chemicals analyst at Gleacher & Co. "They're sizable enough to disrupt market if they want to."

In July 2009, for instance, Silvinit undercut the global potash price by agreeing to a low-ball deal with India. (Like China, India buys its potash via contract, not on the spot market.) The move shocked the industry and weighed on share prices in the fertilizer industry.

With the Uralkali merger, however, Silvinit will likely be subsumed into the BPC cartel (short for Belorussian Potash Co.) and, thus, will no longer have the ability to undercut the big boys.

As it turns out, Silvinit's deal with India in 2009 angered its rivals but also created a bottom for a then-deflated potash market. The bargain price enticed reticent buyers back into the market all over the world and marked the beginning of a rally in potash prices.

This harvest season, crop shortages globally have made the fertilizer industry a hot investment space. With food prices soaring, farmers flush with cash are expected to jam as many seeds into the ground as they can next spring.

Long-term trends -- like population growth and the resulting demand for food -- have also sparked an outbreak of consolidation fever among fertilizer companies. That, in turn, has served to highlight the concerns of critics who believe that the world's handful of potash giants wield too much control over the price of the fertilizer.

This fall,

BHP Billiton

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failed in its high-profile attempt to capture

Potash Corp.


, the world's biggest producer of potash, a potassium compound that is a crucial component of fertilizer blends.

By most accounts, BHP planned to remove Potash from Canpotex, which many believed would have undermined the global potash status quo. Partly for this reason, and the feared impact BHP's plans would have on overall Canadian potash revenues, the Canadian government spiked BHP's bid.

Shares of North American fertilizer producers were mixed in Monday trading. Canada's



was down about 1%, while Minnesota-based


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, a potash and phosphate producer, had inched higher by 0.25%. Potash Corp. was down 0.6%, and

CF Industries

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, which plays mostly in the nitrogen and phosphate spaces, was gaining 0.9%.

-- Written by Scott Eden in New York

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