May 12, 2010 / 8:39 AM / 9 years ago

Russia's Uralkali says potash tariff a blow

MOSCOW, May 12 (Reuters) - Russian potash miner Uralkali’s (URKA.MM) ability to compete on global markets would be seriously affected by an export tariff, company president Denis Morozov told Moscow’s Kommersant daily.

“All in all, introducing a tariff, would, of course, be a serious blow to our competitiveness on the global market, and it will have negative reverberations not only on the attractiveness of investing in our sector, but in the country as a whole,” the executive said in an interview that appeared in Wednesday’s edition.

Russia’s anti-monopoly agency (FAS) said last month it would support proposals to impose an 8.5 percent export duty on potash as a result of rising pricing on the domestic market. [ID:nLDE63D12Q].

However, the head of the FAS added that a final decision would be taken by a commission of first deputy prime minister Igor Shuvalov.

Morozov also rejected the suggestion that the tariff would boost domestic sales since they account for only 5-6 percent of total production by Uralkali and its rivals.

“Therefore, if talking about a potash deficit in Russia is not laughable, then, it is at least unsound — Russian potash producers fully meet domestic demand.”

Morozov also said that Uralkali is proceeding with plans to achieve annual capacity of 7 million tonnes by 2012.

The company last year cut output to 2.6 million tonnes from 4.8 million tonnes in 2008, but expects demand to improve this year.

“In other words, the company is prepared for the moment when demand revives and it becomes necessary to increase production volumes,” the executive said.

In the first quarter, Uralkali was operating at 86 percent capacity, Morozov added.

Reporting by Alfred Kueppers; Editing by Lidia Kelly

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