March 2, 2010 / 8:49 PM / 8 years ago

Russia export duty reports boost Potash Corp, peers

* Russian duty could boost potash price by $50/tonne

* Shares of Potash Corp, Mosaic, Agrium gain

TORONTO, March 2 (Reuters) - Shares of Canada’s Potash Corp POT.TO and those of its peers rose on Tuesday on reports that Russia is mulling a 15 percent export duty on potash exports, a move that could boost global potash prices.

If imposed, the duty could boost the price of potash by $50 a tonne or more based on the current benchmark export price of $350 a tonne for the crop nutrient.

“We see this news as a positive for potash producers outside of Russia as it is likely that any new Russian tax would be passed through to customers effectively raising global potash prices,” said Barclays Capital analyst Farooq Hamed in a note to clients.

The Russian government imposed a 5 percent export duty on potash in March 2008, which was in effect until March 2009.

Shares of Potash Corp rose 2.9 percent to $116.27 in afternoon trade on the New York Stock Exchange, while those of its North American peers Mosaic Co (MOS.N) and Agrium Inc AGU.TO rose 4.5 percent and 2.8 percent, respectively.

The imposition of a potash duty is also likely to benefit other independent potash producers such as Germany’s K+S SDFG.DE and Israel Chemicals (ICL.TA).

Russia’s Uralkali (URKA.MM) and Silvinit together account for roughly 12 million tonnes, or 20 percent, of global potash output.

Uralkali and Belarusian state-owned potash producer Belaruskali jointly export potash through BPC, or Belarussian Potash Co. Potash Corp, Mosaic and Agrium export the crop nutrient through the Canpotex group. The two export consortiums account for roughly 60 percent of global potash exports.

Potash is the common name for various compounds containing potassium, which are used mainly as fertilizers. It emerged as a top commodity a few years ago when high grain prices, tight supplies and strong demand drove prices above $1,000 a tonne from below $150.

Prices have since retreated to about $350 to $410 a tonne as farmers, hit by the credit crisis and falling grain prices, have reined in their use of the fertilizer. But many analysts expect demand to bounce back this year as farmers scramble to replenish soil nutrients.

The fertilizer sector was also boosted on Tuesday after CF Industries (CF.N) relaunched its hostile bid for rival Terra Industries TRA.N, betting that a higher price of $4.75 billion would be enough to thwart the takeover of Terra by Norway’s Yara International (YAR.OL). [ID:nN02142573] (Reporting by Euan Rocha; editing by Peter Galloway)

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