September 12, 2008 / 8:59 PM / 11 years ago

Potash producers, suppliers sued for alleged price fixing

NEW YORK, Sept 12 (Reuters) - Potash Corp of Saskatchewan POT.TO, Mosaic Co (MOS.N), Agrium Inc AGU.TO are among a host of potash producers and suppliers that have been sued by a Minnesota fertilizer maker, alleging price-fixing schemes by the companies.

The suit, filed on Thursday by Minn-Chem Inc, alleges that potash producers and suppliers have since 2003 conspired to fix, raise, maintain and stabilize the price of the crop nutrient in the United States at artificially inflated and anti-competitive levels.

Potash producers across the globe have reaped bumper profits in recent months as potash prices have more than quadrupled over the last year, due to growing demand and tight supply conditions. Potash is a key crop nutrient used by farmers across the globe.

China, which is one of the world’s largest potash importers is currently paying about $650 to $670 per tonne for potash, but China is likely to have to pay $1,000 per tonne or more for next years imports, according to industry experts.

Minn-Chem also accuses Uralkali (URKA.MM) URKAq.L, Silvinit SILV.RTS, Belaruskali, Belarusian Potash Co (BPC) and International Potash Co (IPC) of being a part of the conspiracy.

BPC is the potash export arm of Uralkali and Belaruskali, while IPC is Silvinit’s export arm. Potash Corp, Mosaic and Agrium have their own export arm called Canpotex. However, Canpotex does not supply U.S. demand and has not been named as a defendant in the lawsuit.

Simultaneously, a similar lawsuit was filed by Gage’s Fertilizer & Grain Inc, naming the same set of defendants and has been filed in the United States District Court, Northern District of Illinois.

Potash Corp has declined to comment on the Minn-Chem suit, while Agrium said it is in the process of reviewing the allegations, but it believes that the allegations lack merit.

Mosaic said its legal team has conducted a preliminary review of Minn-Chem’s complaint and believes the assertions are without merit.

“We believe our business practices are in compliance with all applicable laws. The fundamental drivers of fertilizer prices continue to be accelerating global nutrient demand,” said Mosaic’s spokeswoman Sheryl Nagel, in a statement.

Representatives of the Russian and Belarusian companies were not immediately available for comment.

The suit filed by Minn-Chem in the U.S. District Court, District of Minnesota seeks class action status, but does not specify the amount that Minn-Chem seeks in damages.

“It’s a little too early at this stage, but once we get going in the litigation process we will work with economists and we will calculate the damages,” said Joseph Bruckner of Lockridge Grindal Nauen PLLP, which is representing Minn-Chem in this matter.

The Minn-Chem complaint contends that Potash Corp, Mosaic, Agrium, Uralkali, Belaruskali and Silvinit collectively control about 70 percent of global potash exports and cites an analyst’s observation that the global trade in potash is even more concentrated than OPEC’s control over crude oil exports.

A recent workers strike at some of Potash Corp’s mines has led to concerns that potash prices are likely to rise even higher in the months ahead, due to tighter supply conditions.

Both complaints also seek court injunctions that would prevent the potash producers and suppliers from continuing the alleged price-fixing conspiracy.

Shares of the potash producers have been hurt in the last two months due to a sell-off in commodity stocks, but the share prices of potash makers are still significantly higher than they were in mid-2007. (Reporting by Euan Rocha in New York and Roberta Rampton in Winnipeg; Editing by Bernard Orr)

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