* Collapse of potash cartel triggers cross-border feud
* Speculation Kerimov will sell Uralkali stake
* Putin's reticence signals loss of Kremlin support
By Megan Davies and Polina Devitt
MOSCOW, Sept 12 Russian tycoon Suleiman Kerimov
built his multi-billion-dollar fortune with an appetite for
risk, debt and excellent political connections.
Yet there are signs that the secretive mining tycoon has
used up his credit with President Vladimir Putin, who exerts a
tight grip over the strategic natural resources that fuel
Russia's $2 trillion economy.
The 47-year-old from Dagestan has found himself in a tight
spot after his company Uralkali pulled out of a potash
cartel with Belarus in July, upsetting the market and
infuriating a close - if difficult - ex-Soviet ally.
He might have been betting a lower price would force his
rivals out of business so Uralkali could gain market share and
then charge a higher price for the fertiliser ingredient, with
the blessing of the Kremlin.
But if that was the strategy, it appears to have backfired.
The company's CEO was arrested in Belarus for abuse of power,
sparking speculation that Kerimov has come under pressure to
sell his $3.5 billion stake in the world's top potash producer.
"It's turning out to be a bigger mess than he ever imagined
and the question is why he did it," one financial source, who
spoke on condition of anonymity, said of Kerimov.
"You don't go into such a situation without having backing
from someone ... Maybe he did have some conversations but they
weren't high enough and it's all turning out quite badly."
Kerimov prospered during the four-year presidency of Dmitry
Medvedev, pulling off a $24 billion merger that put Uralkali in
control of 40 percent of the $20 billion global potash market.
But, with Putin's return to the Kremlin last year, his
influence has shown signs of waning. Without a viable political
'krysha', or 'roof', he may struggle to keep his stake or sell
at a good price.
"Mr Kerimov is a financial investor, i.e. thinks about (a)
sale every day since acquisition, and even before," said a
source familiar with his thinking. The source rejected the
notion that Kerimov may be vulnerable to a conspiracy in which
Putin loyalists were seeking to sideline a pro-Medvedev faction.
A spokesman for Kerimov's foundation did not reply to
questions submitted by fax and calls to his office and mobile
phone went unanswered.
Kerimov's empire is built mainly on Russia's vast natural
resources. He is the largest shareholder in gold miner Polyus
but is also known to have bought Wall Street banking
stocks after the 2008 crash.
His fortune peaked at $17.5 billion in 2008 before slumping
to just $3 billion the following year, according to Forbes
magazine. He was estimated to be worth $7.1 billion in March,
still plenty to fund a fast-paced life style.
He has a seat in Russia's upper house of parliament and,
like other Russian oligarchs, owns a top-flight soccer club,
Kerimov rarely appears in public however, preferring to keep
a low profile although he made headlines when he was badly
burned when he crashed his Ferrari Enzo into a palm tree on the
French Riviera in 2006. His TV starlet passenger fled the scene.
Belarussian President Alexander Lukashenko blamed "Russian
scoundrels" for the collapse of Uralkali's export partnership
with state-owned Belaruskali in July.
Within a month, Belarus had arrested Uralkali CEO Vladislav
Baumgertner, a Kerimov protege who had been lured to a meeting
with Lukashenko's prime minister. Paraded in handcuffs on state
television, Baumgertner was later charged with abuse of office
and faces up to 10 years in jail.
Such treatment would normally precipitate a tough response
from the Kremlin, which rarely pulls its punches if Lukashenko
strays from a relationship long based on demonstrative loyalty
towards Moscow in exchange for economic and financial support.
Putin, in his first reaction last Friday, called for a
resolution to the dispute. But he also said he didn't want to
"kick up a fuss".
Speculation Kerimov may sell the 21.75 percent stake in
Uralkali, held through his foundation, was fuelled last weekend
by a Facebook post by lawyer Alexander Dobrovinsky that talks
with pro-Putin businessmen were under way.
Although Uralkali's shares have since rallied, erasing most
of their recent losses, none of the buyers named in the
unsourced reports has come forward to confirm their interest.
They include: Arkady Rotenberg, a construction tycoon and
Putin's former judo sparring partner; Mikhail Gutseriev, founder
of oil firm Russneft; and banker Vladimir Kogan.
Norilsk Nickel, the world's top nickel producer,
and Vladimir Evtushenkov, owner of oil-to-telecoms conglomerate
Sistema , have denied being interested.
Sources close to Vladimir Potanin, the billionaire CEO of
and a shareholder in Norilsk, also say they are not interested
in talks or even an approach from Kerimov.
Now would be an inopportune time to sell - Uralkali's shares
have nearly halved since 2011 and the company's prediction of
falling potash prices have made investors bearish.
Analyst Kevin Whyte at VTB Capital said chances of a deal
were growing but: "There are three obstacles - finding a price
to satisfy the buyer and seller, finding financing, and that the
deal would only make sense if the person is sure they can make a
deal with the somewhat unpredictable Belarussian side."
A second financial source said Kerimov might sell if offered
a high premium, such as around 30-40 percent, to Uralkali's
"He's a smart investor and has a track record of buying low
and selling high," the source said, while cautioning: "Why would
(buyers) offer such a premium? How do they make long-term
Senior aides to Prime Minister Medvedev rallied immediately
in support of Kerimov after news of Baumgertner's arrest broke
on Aug. 26, in contrast to Putin who said only
that he had not discussed the matter with Lukashenko. I
First Deputy Prime Minister Igor Shuvalov accused Belarus of
stepping "way out of line". Deputy Prime Minister Arkady
Dvorkovich endorsed a reduction in oil exports to Belarus for
the rest of this year.
"It is indicative that old friends, the vice-prime
ministers, spoke at once, and the Kremlin was silent," said a
source familiar with Kerimov and others involved in Uralkali.
Dvorkovich, who has broad responsibility for energy policy,
is however seen as no match for Igor Sechin, a former aide to
Putin who, despite no longer being in government, is arguably
Russia's second most powerful man.
Sechin, now head of state oil major Rosneft, has
pushed back against the export cuts. He met Lukashenko in Minsk
on Wednesday, and pledged that Rosneft would meet its supply
"Fulfilling contracts is a holy rule of business," Sechin,
was quoted by Lukashenko's press service as saying, making no
mention of Uralkali CEO Baumgertner.
Those comments are likely to fuel talk of an exit from
Uralkali by Kerimov, and his replacement by an investor more
amenable to the Kremlin.
That, in turn, could open the door to a revival of potash
cooperation between Moscow and Minsk in a bid to stave off a
slide in prices that - even if Uralkali is a low-cost producer -
would inflict pain across the industry.
"When the whole thing happened it was so bizarre and no-one
knew what was behind it...There was speculation the shareholder
fell out of favour in Russia, that (it) was orchestrated, but
no-one knows," said a third source.