Silvinit Offers Unacceptable Potash Contract Terms
Today, on August 11, Silvinit announced that it sent the major Russian complex fertiliser producers contracts for the supply of 247,500 tonnes of potash at RUB 3,955 per tonne, the price suggested by producers and fixed through the end of 2009. Unfortunately, this statement is not an accurate representation of the facts.
While our companies did receive contracts from Mineral Trading (Silvinit’s distributor), the contracts’ terms and conditions are not in line with the agreements achieved at working meetings with representatives of the Russian Government and documented in the minutes from those meetings, as they link domestic prices for potash to export prices. Either Silvinit CEO Rostyam Sabirov was misled by Mineral Trading, or the company is wilfully attempting to mislead both the Russian Government and the business community.
Our companies once again stress that the price formula Silvinit is trying to force on us – a formula based on international potash prices – is unreasonable and unacceptable. We have never suggested to Silvinit or Mineral Trading that we would sign potash supply contracts on such terms.
Our companies have had to discontinue or significantly cut back complex fertiliser operations due to a lack of potash supplies.
Silvinit is making every effort to abuse its market monopoly and inflate prices in breach of the resolution adopted by the Russian Government to sustain domestic potash prices through the end of this year at the level of H1 2009.
We believe that the Russian Government must take urgent measures to resolve this conflict.