Lithuanian railways halts transport of Belarus potash

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VILNIUS, Jan 31 (Reuters) - The board of state-owned Lithuanian Railways on Monday voted to stop transporting potash produced by Belarus state-owned potash producer Belaruskali unless it gets government approval to resume, the rail company said in a statement.

Belaruskali, the world's second-largest producer of the crop fertiliser which is a big cash earner for Belarus, was sanctioned by the United States last August, a year after a crackdown following a disputed presidential election which President Alexander Lukashenko said he won.

The ban on potash sales took effect on Dec. 8 after a four-month wind-down period, but the transport of Belarus potash has continued via Lithuania.

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This caused a public outcry in Lithuania, a U.S. ally and one of Europe's most vocal critics of human rights abuses in Belarus. read more

Earlier this month, Lithuania terminated the transport agreement between its railway company and Belaruskali, saying it went against national security. The agreement will end on Feb.1. read more

But six companies from Belarus and Lithuania, including potash trading companies, have asked the railway to continue to transport the potash after the Belaruskali agreement ends on Tuesday, the railway company said.

Their requests were referred to the government, which will decide if these contracts go against national security.

"This policy was agreed by the shareholder (the government) and approved by the board", said the state-owned rail company.

Landlocked Belarus uses Lithuania's Klaipeda port to export potash to customers which include India, China and Brazil.

Russia, which remains Belarus' ally, does not have enough spare port capacity to handle Belaruskali's 12.5 million tonnes a year.

Potash is used as a fertiliser many crops including soybeans, rice, corn, fruits, vegetables, palm oil and wheat, and its prices are set for an extended rally after the U.S. sanctions. read more

Lukashenko earlier on Monday ordered his government to respond "within days" if Lithuania blocks Belarus cargos from reaching its port.

"We are ready for negotiations, but if they continue to smother us, we will put our plan into motion", Lukashenko said in a video on published on his Telegram channel. He did not detail the plan.

Lithuanian Prime Minister Ingrida Simonyte came under pressure to resign after Lithuania's potash transports continued beyond Dec. 8, when the U.S. sanctions came into full effect, but she announced she would stay in her post.

The head of the railways agreed to step down in December to "de-escalate" the public outcry.

Norwegian fertiliser maker Yara (YAR.OL), which buys 10-15% of Belaruskali produce, said this month it will wind down purchases of potash from Belarus by April 1 as international sanctions made it impossible to continue the trade. read more

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Reporting by Andrius Sytas in Vilnius Editing by David Goodman and Jane Merriman

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