UPDATE 1-Russia potash row seen causing market tumult and a price drop

Wed Aug 28, 2013 1:29pm EDT
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By Niu Shuping and Rajendra Jadhav

BEIJING/MUMBAI Aug 28 (Reuters) - The global potash market could suffer short-term turbulence as it faces a potentially large price drop because of an escalating dispute between major exporters Russia and Belarus over the collapse of their once-mighty cartel.

Belarus this week detained the chief executive of Russia's Uralkali, the world's top potash producer, accusing him of inflicting severe economic damage.

Moscow demanded the release of CEO Vladislav Baumgertner. Uralkali controls 20 percent of the world market and is partially owned by Suleiman Kerimov, a billionaire with close ties to Russian President Vladimir Putin's administration.

"We are very concerned as to how things will develop next. Chinese firms must have suspended signing any deals before the situation becomes clear," said a Chinese industry source familiar with the strategies of potash buyers.

The detention is an escalation of a dispute between Uralkali and state-owned Belaruskali that has led to the breakup of trade partnership Belarusian Potash Company (BPC). Some key importers are now thinking about suspending purchasing talks until the matter is clarified and it becomes clearer where potash prices are headed.

Belarus also put four managers from Uralkali on Interpol's wanted list, including sales head Oleg Petrov. It remains unclear whether he can travel for talks to China or India, two of the world's biggest users of the crop nutrient.